Buy Gold Coins And Bullion on Dips Under $900!

Buying gold coins and gold bullion when gold dips below $900 per ounce is a wise course which will reward you handsomely.  There are many erroneous reports in the media, but the wisdom of buying gold coins and gold bullion on the dips below $900 is not one of them!

Last week gold ran through $900 per ounce and appeared to be heading higher,  but lo and behold gold opens down on Monday and powered down this morning.  Gold above $900 is proving very hard to maintain, what with the imploding global economy and all the media hype over the coming “swine flu pandemic”.  What incredible sheep we have become in this nation, when news readers fill the cycle with pandemic talk and then have the lack of investigative skills to link gold’s fall in price with the pandemic hype that they are pushing!

I could not believe I was actually reading this from Bloomberg yesterday by Halia Pavliva.

Gold fell, heading for the sharpest drop in three weeks in New York, on concern that a swine-flu outbreak may delay a global economic recovery, cutting demand for the metal. Silver also declined and platinum tumbled.

The World Health Organization raised a global alert to the highest ever and said swine flu can no longer be contained. The virus has spread to the U.S., Canada, Europe and New Zealand and killed at least 152 people in Mexico. The International Monetary Fund forecast a 1.3 percent contraction for the world economy this year before the flu outbreak.

The fear is there, said Stephan Platt, a commodity analyst at Archer Financial Services Inc. in Chicago. The fear of the postponement of the recovery, which takes away fabrication demand. Gold is falling because of its linkage to economic activity.

Gold futures for June delivery dropped $17, or 1.9 percent, to $891.20 an ounce at 11:33 a.m. on the New York Mercantile Exchange’s Comex division. A close at that price would be the steepest drop for a most-active contract since April 6.

Buy Gold Bullion And Coins On Dips Below $900

The day that the alien space ships land in Washington D.C. (Oh, that’s right, they already have taken over D.C., they are called politicians) gold should drop to $25 per ounce.  Sell all your gold holdings and convert them into dollars, the only true store of value around.  Give me a break.  Is there someone out there that has a clue to what’s going on?  Glad I asked because I have one, Ambrose Evans-Pritchard, who wrote this article on April 20th, 2009.

Gold price could hit $1,500

The aggressive monetary policy of central banks around the world is playing havoc with the structure of the bullion market, creating a chronic shortage of gold that may soon push the metal to fresh records above $1,500 an ounce.

Charles Gibson, a gold expert at Edison Investment Research, argues in a new report that negative real interest rates (below inflation) in the US and beyond has upset the “leasing” machinery in the gold industry and led to a sustained market squeeze.

This is what occurred in the late 1970s, driving gold prices to $850 and ounce roughly $1,560 in todays terms. Gold finished last week at $870.

Mr Gibson said the powerful dynamic could lead to a second leg of this gold bull market, even though the metal has already enjoyed a torrid run over the last eight years.

In normal times, gold mining companies sell  or hedge a chunk of their output in advance through bullion banks. These banks cover their positions by leasing gold from central banks. This bread-and-butter trade created excess supply of 500 tonnes each year until the start of this decade.

Low real interest rates have caused the process to reverse, creating a shortfall of about 500 tonnes. The process accelerates as rates turn negative, leading to a scramble by market players to find physical gold.

There are already reports that gold bars are becoming scarce, partly due to fears that futures contracts and other forms of paper gold may not prove reliable if there is a serious break-down in the global financial system. Pure metal whether Krugerrands, Maple Leaf coins, or the “five tael biscuit” favoured by the Chinese entail no counterparty risk.

Maple Leafs, American Eagles and Krugerrands are the way to go.  I am recommending buying gold coins and gold bullion on any dips in the price of gold below $900.  These dips should stay in the trading range with $870 as a rough bottom, but if the pressure is really put on we could see gold between $820 and $840 per ounce.  These are media driven sell offs which are not supported by the actual buying numbers in the gold market. Just as oil was pushed way below it’s intrinsic value, only to bounce back,  gold will follow the same pattern until global events pushing the media hype out of the headlines. The longer gold is held down artificially,  the higher it will spring when it is released.  That day is rapidly approaching.

I have always traded gold with the idea in mind of selling periodically in order to generate profits.  I only want to accumulate at this time.  At some point in the future we can sell and make profits, but right now, it is more important to have wealth in a secure storage vehicle, namely gold coins and gold bullion. This is the first time that I have been in a buy and hold mode since I started trading.

Much is being made about scrap gold sales and how they are forcing down the price of gold.  Central bank purchases are more than enough to offset scrap sales and still create the reaction that Ambrose Evans-Pritchard is talking about.  This from Reuters.

China has increased its gold reserves by 76% in six years to 1,054 tons, the official Xinhua News Agency reported, citing the head of the State Administration of Foreign Exchange. The country has now the fifth- largest gold stockpile by country, behind Italy’s 2,451.8 tons, according to data compiled by the World Gold Council.

“Gold has been given a further boost on the back of the China reserve news,” said James Moore, an analyst at TheBullionDesk.com. “But the metal now needs to clear trend-line resistance around $916 to confirm the return of more bullish sentiment and target the $940 area.”

Futures were climbing $3.70 to $909.60 an ounce at the Comex division of the New York Mercantile Exchange. The contract has traded as low as $906.70 and as high as $911.50 so far during the session.

Reuters reported that China has been building its gold reserves substantially since 2003. Hu Xiaolian, head of the State Administration of Foreign Exchange, disclosed that the country now has a total of 1,054 tons, having added roughly 90 tons a year. China’s gold buying has been rumored for years, but the country stayed quiet so as not to limit its ability to find favorable prices.

China is setting the stage to become the next world super power and they are doing it by accumulating gold everytime the price drops.  They know what is coming because they base their actions in decades rather than in years.  Their actions will set the stage for a global gold backed reserve currency, which they will control.

Read the tea leaves and get on the train before it leaves the station.  Buy gold coins and bullion on the dips below $900 while you still have the opportunity.  The downside for gold is very limited at these levels.

I’ll leave you with the master: Jim Rogers

“Yes, politicians are making mistakes. In Japan, the problem has lasted for 19 years. I hope that it doesn’t last 19 years in the U.S. The approach that works is to let them (U.S. banks and automakers) collapse and clean out the system. The idea that phony accounting is the solution (through changes in mark-to-market rules) is ludicrous. And the idea that a debt problem and an excessive spending problem can be cured with more debt and more spending is ludicrous. (My highlights!)

It’s laughable on its face, but politicians think they’ve got to do something. Unfortunately, they are doing the wrong things and they are going to make it worse.”

He then talked about something that I’ve been talking about for a couple of months now… The Treasury bubble… Let’s listen in…

“I am anticipating shorting bonds — the U.S. long bond. It’s about the only real bubble around that I can see right now — other than the U.S. dollar. I am not shorting bonds at this moment because I’ve shorted plenty of bubbles in my day, and I have learned that you better wait because they go up higher than any rational person can anticipate. But my plan is to short the long bond in the U.S. sometime in the foreseeable future.”

Don’t let the politicians and the media distract you from the real prize.  Protect yourself now by buying gold coins and bullion on the dips below $900.

Till next time, good luck and good trading!

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• Buy Gold Coins and Bullion Now!
• Gold Down, Buy Gold Coins and Bullion

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