So, here we have the price of gold getting slammed in recent days–and this leads some people to say that gold’s glory days are done. Many have said that the bull market in gold and precious metals has come to an end after an 11 year run. Taken at face value, maybe this seems to be the correct posture for traders to dump their precious metals holdings as well as the miner stocks?
But let’s not forget that the
central banks will do everything in their power to prevent
deflation….but if it somehow the CBs themselves should collapse, and
deflation does occur, then relative to everything else, gold will still
be the best investment. In other words, if gold were to lose 75% of its
nominal value, that would be less of a loss than almost any other
investment. The deflatiomists will pay a dear price for loading up on
the US $ as an investment should the Fed itself suffer a collapse due to
its over leveraged balance sheet.
BTW….the reason gold is down
today has to do with the Yen crossing 100…because DXY is a basket of 6
major currencies against the $…also, two other currencies from Korea
and India dropped yesrerday due to lowered interest rates by their
central banks….so relative to central bank money printing in other
countries, this creates a rise in the $ which makes the machines sell
Meanwhile, China imported the most gold ever from Hong
Kong’s gold market last month…non-US central banks are buying physical
gold at these artificially low prices…talk about deceptions!
I say accumulate gold and silver while you are getting these markdowns
at this level….the gold market is being systematically manipulated…
is it that gold and silver coins have sold out down at the US Mint? Why
is that silver coin dealers can’t find any supply to fill new orders?
Why is China buying record amounts of gold from the Hong Kong Exchange?
Why does Germany want most of its gold returned from the NY Fed (and the
Fed keeps putting them off?)
There is a massive manipulation
going on with the gold market…hedge funds, central banks, and certain ETF
administrators are trying to push the price of gold down to force the
average investor to bail, while they accumulate.
The other point
that the gold bug slayers complain about that there is no inflation, so
why own gold? What they are missing is that gold is more than an
inflation fighter….gold is an alternative currency. It is the world’s
only asset currency (all paper money is debt currency). The next big
move higher in gold may not be for inflation reasons at all…but
rather, as an alternative to a crashing dollar (though inflation would
likely ensue once the $ crashes as the cost of imports would skyrocket).
When the turn comes, it might be very suddenly. We may wake up
one morning to find the US $ has collapsed overnight! Gold could spike
$500 overnight…or more. It’s the one thing I am not trading….only
buying more on every big dip like we are experiencing now. If you are
charting gold and waiting for several buy signals, you might get caught
with your pants down….if the US $ depreciates by 20% overnight, then
the money sitting in your sweep accounts and the money tied up in some
other stocks while you are waiting….could also depreciate by 20% or
more….then, you won’t have the money to buy gold (at least not all
that much as you would want when the $ crisis arrives)…. Thanks!