Gold Commentary

Is it time to buy gold bullion coins? Of course it is if you do not already have some; or if you do not have enough. Many investing professionals such as James Sinclair believe that gold will pas $1000 to $1650 before 2008 is out.

I don’t care if you buy gold bullion canada or buy australian gold bullion or any other kind of gold bullion. I just think it is prudent and wise to have some money in physical gold or silver instead of a paper currency.

You noticed I said physical above. You have to decide how much is too much or too little. Just imagine if the banks closed and you did not have access to your money. Can you live on the physical and paper assets. For a week? For a month? For a year?

I don’t know what is going to happen, but I do believe we are living in economically dangerous times. Do your financial home work. Get educated about your country and the world around you. Make the decisions you feel will be right for you and your family.

Well, there was no rise in interest rates just as expected … lol.

What was the result? Stock markets sold off and gold rallied. As mentioned in an earlier post, do not pay attention to what these guys say. Pay attention to what they do or do not do.

Is it time to load up the trucks? Probably not. It is time to get a little safe gold for these turbulent times. Not more than you can afford. Just a little to act as a slight insurance policy.

If I were a betting man (and I am), I bet we have a small rise in interest rates in July or August. The initial gold reaction, gold prices will drop. But, it is only temporary. At some point in time interest rates will begin rising and gold prices will rise right along with it.

Just one man’s opinion. Study, review the markets and make your own conclusion.

I love the words “Peak Gold” in the title of this post. If indeed gold production is slowing down, there is only one outlook for gold prices in my opinion … up!

Gold continues to consolidate between 0 and 0 but the 200 day moving average at 5 and 0 looks like providing strong support given the prevailing macroeconomic climate and the ever important supply/demand fundamentals (see below).

I thought this was an interesting speech. The one thing I will note, you can’t believe what he says. Why? His lips are moving.

My suggestion. Listen to what he says. See what happens. Don’t react as you will be late and it could very well cost you money.

And the Ben Bernanke Award for Fiction Goes to…

Ben Bernanke’s speech in Barcelona this week hardly marks a new strong Dollar policy. So why all the fuss about “lines in the sand” and a shock 0.25% rate-hike — maybe — this fall…?

Economics is confusing. On the surface, it seems to be nothing more than a swirling system of exchanges, winks and nods, and shady agreements between powerful governments and big corporations. To a degree, this is true, but it by no means describes economics as it should be described. There are certain “rules” of the game that govern transactions between large and small participants.

In our time, there is an increasingly complex question about which is more “real”, gold or the American Dollar. This complex question has a fairly complex answer, and one that doesn’t necessarily leave you feeling that either one is any more real than the other. However, there is a simple way to understand the basics.

In a sense, neither gold nor the American Dollar is “real” money. Neither of them has a standardized value the way they have had during certain points of history. Between 1946 and 1972, the two forms of money were tied together under the Bretton Woods system that defined for the world the value of gold in American Dollars. 1 ounce of gold was worth $35 dollars, no matter where in the world you went. This gold standard enabled other countries to measure their currency’s value against the dollar, and therefore against gold.

Since the collapse of the Bretton Woods system in 1972, these two forms of money do not define each other anymore. They both still have specific uses and values, however.

Gold is valuable because it remains an unofficial standard. Major banks of the world typically keep a reserve of gold that they do not trade. They keep it as a security measure against destructive fluctuations in the value of paper currencies.

The dollar is valuable because of its liquidity. It is still the main currency of world trade, and what major banks use to make transactions with. While it is not backed by anything, it is still valuable and much more practical for use in transactions.

So which currency is more “real”? Well, neither and both. It’s may be better to think about them in terms of their individual uses. Gold is more useful for saving and securing yourself, but dollars are more useful for buying and selling.