China and Iran Switch to Gold - Will U.S. Investors? 8 comments
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Gold rallied sharply Thursday, and is rallying again at the time of this writing on Friday -- it's now broken above the significant resistance range of 740-750, and is currently testing the $800 level. While the technical outlook on the daily chart still looks a bit bearish for gold, some major fundamental news of late suggests the bull market may be ready to resume.
Consider:
- Iran recently switched to gold reserves.
- China is massively increasing its gold reserves.
- Perth mint, one of the most prominent gold mints in Australia, has suspended orders.
- Prominent investment strategist John Embry has warned that December delivery contracts of gold may fail -- this would expose gold scarcity and send prices upwards.
The China and Iran situation is particularly interesting; their decision to switch to gold reserves suggests a reluctance to hold US dollars and US Treasuries. This would increase the likelihood that deficit spending would prove to be inflationary, as it would need to be paid for via an expansion of the money supply. Moreover, while it is probably too early to say for sure, this could be the beginning of the world market making a run on the US dollar, a scenario which many dollar bears, most notably Peter Schiff, have come to expect in light of the rising deficit spending and the very weak fundamentals underlying the US economy.
I have viewed gold as a key element of any long-term portfolio, and continue to do so.
Disclosure: I am long gold.
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In a word, YES!!! They have to. For example, I used to buy a certain item in quantity at my local supermarket, say, 4 items for 5 dollars. Only recently, that same item now goes for 2 dollars EACH!!! And food packages, while sold at the same prices as before, had seemed to shrink in size. That's just a couple of supermarket examples. There are many other examples where inflation is making its unwelcome presence known, such as inflation eating into whatever earnings one might make in a stock/bond portfolio. It has an appetite!!!
Hedge funds are discovering and desperately appreciating the relative stability of their gold reserves. Gold rises to the occasion, and that's good!!
There are a number of things wrong with that besides lacking portability and liquidity. Like how many barrels of oil can u stash in your garage?
www.kitco.com/ind/Beva...
On Nov 24 04:31 AM Jeff Nicolas wrote:
> Careful how you read Gold Bug hysteria. For example Perth Mint has
> not simply suspended orders, I know I am customer of Perth Mint and
> placed another order today. Perth Mint is accepting orders on both
> Gold and Silver metal and delivering with minimal delays. If you
> want to order Gold coins (not bullion or Siver coins) you will have
> to wait a few weeks before you can place your order, they are behind
> on the fabrication of these particular coins only. Sorry, I know
> you don't want to hear this, but there is no shortage of Gold or
> Silver metal, bullion can be ordered now for delivery from Perth
> Mint.