Buy Gold Coins, Bullion to Hedge Dollar Drop

The dollar’s days as the world’s reserve currency are numbered, so you should protect yourself by buying gold coins, bullion and gold stocks.  Buying gold coins, bullion and gold stocks will protect you from the dollar’s decline.

I hope everyone had a nice Easter weekend and enjoyed the wonderful spring weather.  The long three day weekend should have given everyone a break and the time to reflect on what truly is important in life.  The markets in the U.S. opened this morning with the dollar under a little bit of pressure.  The DOW is down 112 at 7,971, the NAS down 19 at 1,633, the dollar is down .73 (.95%) at 84.91 and gold has moved up above $890, currently up $17.60 at $896.60.

The price of gold is inexorably linked to the value of the dollar.  As the dollar begins to unravel, gold will move up in every larger percentages.  There are no ifs, ands or buts about this because it will occur.  The only thing in question is the time line.  If we knew the exact time line we could all make a t0n of money with no risk at all.  Anyone that claims to know exactly when and for how long gold will move on it’s next run is blowing smoke.  I have urged you to buy gold coins and gold bullion on the dips and those of you that have should be in a great position to profit from gold’s next move up.

Everything gold is tied to the value of the dollar. The die has been cast by the government and the dollar will not be able to maintain it’s current over valued status for long.  As soon as it drops from favor and heads to where it really belongs, first 72, then 62 and finally 52 or below, gold will move forward with leaps and bounds and we will all look back on the current gold valuations with fondness as one great opportunity to have moved into gold coins and gold bullion.

With that thought in mind, I want to bring you a couple of articles that should help to clarify both the directions that the dollar and gold should be headeding  toward in the near future.  This first piece from Jerome Corsi clearly outlines why the dollar is  truly a “dead man walking”.

Federal obligations exceed world GDP

Does $65.5 trillion terrify anyone yet?

Posted: February 13, 2009 11:35 pm Eastern
By Jerome R. Corsi
© 2009 WorldNetDaily

As the Obama administration pushes through Congress its $800 billion deficit-spending economic stimulus plan, the American public is largely unaware that the true deficit of the federal government already is measured in trillions of dollars, and in fact its $65.5 trillion in total obligations exceeds the gross domestic product of the world.

The total U.S. obligations, including Social Security and Medicare benefits to be paid in the future, effectively have placed the U.S. government in bankruptcy, even before new continuing social welfare obligation embedded in the massive spending plan are taken into account.

The real 2008 federal budget deficit was $5.1 trillion, not the $455 billion previously reported by the Congressional Budget Office, according to the “2008 Financial Report of the United States Government” as released by the U.S. Department of Treasury.

The difference between the $455 billion “official” budget deficit numbers and the $5.1 trillion budget deficit cited by “2008 Financial Report of the United States Government” is that the official budget deficit is calculated on a cash basis, where all tax receipts, including Social Security tax receipts, are used to pay government liabilities as they occur.

These are truly astonishing numbers that can never be paid off and they have sealed the dollar’s fate.  The U.S. government has given up any hope of ever paying off their obligations and have chosen to monetize the debt instead.  There can be only one end to this insane practice and it is always the same, hyper-inflation.  Every time monetization has been used, the end result has been the same.  There are simply no recorded instances where the monetization of debt has not debased the currency.

The rumblings continue to grow in the global community for a new reserve currency.  Unlike the American public that pays no attention to what the Federal Government is doing, foreign governments around the world are paying attention and they want no part of the U.S. monetization plan.  They hold U.S. debt and they know that as the dollar drops, their investment drops with it!

Top Chinese Banker: Dollar Soon Irrelevant

Thursday, April 9, 2009 8:53 AM
By: Dan Weil

Zhu Min, executive vice president of the Bank of China, a government-run commercial bank, says that the Federal Reserve’s decision to print billions and billions in new dollars to head off the financial crisis would make the greenback irrelevant to global finance and trade.

That will happen unless there is another global currency to balance it, he told CNBC.

While the dollar remains a global currency, it can’t support the world economy by itself, Zhu says.

Either we ask the U.S. to take the whole responsibility of the world economy, with the dollar as global legal tender, or else we need something else as an anchor, Zhu says.

He reiterated a call for the use of an International Monetary Fund (IMF) instrument to offset the dollar’s influence on international reserves and trade.

Known as special drawing rights (SDR), the practice dates back to the late 1960s, when the IMF used the vehicle to supply reserve assets to expand trade when gold and the dollar were in short supply.

In this next piece, investment analyst and financial writer Yves Smith is referring to Gillian Tett, the head financial writer for the Financial Times.

[Whatever] Tett is writing about  will be taken seriously, since Tett is read by central bankers.

So it is newsworthy that Tett writes today that the odds of a return to the gold standard are increasing:

A panel at the World Economic Forum meeting in Davos  was asked to produce one concrete recommendation to fix the global financial crisis.

The top pick?  a new reserve currency, akin to an old-style gold standard.

These rumblings are soon going to become a roar which will lead to a change from words to actions. The dollar as the world’s reserve currency will end soon with a possible exception if the dollar changes and is partially backed by gold.  I doubt that the world would accept that and I really doubt that the U.S. would propose going back on the gold standard.

All in all, these events and rumblings are very gold positive.  Buying gold coins and gold bullion now is the right move in this environment.  I think that now is the right time to start buying gold stocks as well.  This next report from Reuters is very positive for one of my favorite gold stocks, Royal Gold.

Royal Gold prices share offering

Apr 8 2009 8:07am EDT

TORONTO (Reuters) – Royal Gold Inc said late Tuesday it has agreed to sell 6.5 million shares at $38 per share, and will use the proceeds to finance its acquisition of a stake in the gold produced from the Andacollo mine in Chile.

Denver-based Royal Gold said it expects proceeds from the offering, net of commission and expenses, of $235.3 million. The company said its offering will close on April 14.

Royal Gold, which acquires and manages precious metal royalty interests, earlier this week said it would acquire a stake in the gold produced from the Andacollo mine in Chile from Canada’s Teck Cominco and Chilean state-owned entity ENAMI for $300 million.

The offering at $38 a share should put in a solid base for RGLD going forward and the current price of $37.75 is a great entry point.  The following chart shows a possible head and shoulders pattern that bodes well for RGLD going forward.

As always do your own research before you buy or sell a stock, but with that being said, I own this stock and I am adding more to my position at this price level.  As the dollar begins it’s decline you should be buying gold coins, gold bullion and gold stocks.

Till next time, good luck and good trading!

More Gold Market Analysis:

• Buy Gold Coins and Bullion Now!
• Buy Gold Coins And Bullion on Dips Under $900!
• Long Bond/Dollar Say Buy Gold
• Gold Down, Buy Gold Coins and Bullion
• Golden Reality Check

Incoming inquiries for this information:

• dollar drop
• price of gold bullion april 8 2009