Gold Down, Buy Gold Coins and Bullion

Gold ended the week at  critical support near $870. Buy gold coins and bullion now before gold turns around. Buying gold coins and bullion has turned out to be one of the best investments of the last decade!

Please Note:

Buygoldco.com is moving into a new phase where we will look at the opportunities to buy, or sell as the conditions warrant, gold coins/bullion and gold stocks on a weekly, or bi-weekly basis depending on the market action.  If the situation at the time demands more coverage, buygoldco.com will respond in kind. We encourage comments and we will respond to specific questions that you may have regarding physical gold and gold stocks.

The Week In Gold

This past week has been interesting to say the least.  Gold started out the week in the mid $890′s and things turned south as the week went on, with gold ending the week at $868.70.  The neckline support level that had been serving to hold prices from moving lower finally gave way Thursday night. While this change was taking place the equity markets were neither rising dramatically nor were they dropping, but rather holding on in a tight range with a small upward bias.  That in itself was enough to put more downward pressure on gold which caused it to lose more of it’s safe haven appeal.

Buy Gold Coins And Bullion Now!

Two major players came on to the scene on Friday which changed things for the short term for gold.   GLD, the ETF reported a drop of 8 tons for the first time in almost three weeks.  Add to that, the dollar posted a .71 (.91%) gain to end the week at 85.89.  Somebody had better tell the dollar that it is dead, because it keeps moving up for no logical reason.  The dollar’s continuing rise is the biggest mystery to me, but I am sure that once reality sets in, it’s fall will be swift and just as unbelievable.

As of late, investment demand has been the leading factor in the  gold price.  With the latest reports from GLD, one might think that gold was going to roll over, but the picture is a little more complicated and interconnected then that.  Just when everyone is telling you that the high price of gold is killing the gold demand in India, gold moves down and what returns?  You guessed it, buying demand from India.  It’s a small global world!

This piece comes from Business Intelligence Middle East, Saturday, April 18th.

India has imported an estimated 10-15 tonnes gold in the first fifteen days of April and it may go up if prices drop further, a bullion expert said. India, which imports around 700 to 800 tons of gold annually, had virtually halted purchases as consumers weren’t willing to buy because of high prices.

“India’s gold imports are estimated to be between 10-15 tonnes in the first fortnight of April,” Bombay Bullion Association (BBA) President Suresh Hundia told PTI.

There was no import in February and March as Indian bullion traders stayed away from the market due to high prices, he said.

“As prices have fallen from the high of US$1,000 per ounce, traders have started placing orders,” Hundia noted.

Buying gold coins and gold bullion has been a great strategy for those that want a safe heaven and those that want to profit during these tough times in the market. As the price of gold fluctuates during this on going financial crisis one would be well served if one were to follow the purchases in India. It is very simple.  They know how to buy when the price is low and they know value and wealth.  I have recommended buying gold coins and bullion on the dips countless times and this next piece from Geena Paul, CommodityOnline proves my point.

KOCHI: If you want any proof for gold’s unbeaten track record, just check out the returns it gave during the past one decade.

From 1999 to 2008, gold has given handsome reruns to Indian investors and housewives, who are devoted worshipers of the yellow metal in an emotional way.

In Indian households, gold has been a traditional harbinger of good fortunes and housewives give tremendous importance to their gold possessions as they think gold brings good luck to their families. In fact, world’s top business honchos, who flaunt their B-school degrees to give authenticity to their goof-ups like the US sub-prime crisis, should learn a few lessons from the Indian housewives.

Their traditional wisdom has beaten the top business brains in the world with the simple Indian housewives reaping around 27% average returns during the past decade from their gold possessions. And they are still not worried about the recession because their investments are in gold, which is still the best option for anybody who wants to make some money from his/her investment.

The only drawback for the housewives is that they don’t draw million dollar salaries like the top level CEOs of multinational financial institutions. And, they get paid for ensuring the collapse of well-run firms!

As of now, gold has dropped down to  test the former low made in early April. It is really important that gold hold the price here to avoid the next stop down at $852 – $850.  It seems to me that we will need some outside event to help gold out here, or we are going to see $850 gold.  To me, this is a strong buy signal as long as you are prepared to wait out the economic euphoria and wait for the next shoe to drop in the adventures of the “quantitative easing gang”.

One more problem that an “outside event” could cure is the breaching of the 100 day moving average.  The 100 day moving average is  watched by technically oriented trading funds and now that it has been breached, they are selling.  It will be important to see buying early next week to keep the technical picture from eroding further.  It is imperative that gold get back above $880 early next week, or $850, here we come.

As we approach this tipping point for gold, it is interesting to note, that despite the widely publicized Federal Reserve buying of longer dated Treasuries, prices have not moved higher. This would lead one to believe that a huge supply is lurking above the market (aka: “quantitative easing”) and traders are worried about how much of this excessive amount of new debt can be sold.  This debt would be troubling if it effected us for the next four or five years, but unfortunately it will effect us for the foreseeable future.  Can you say, ” hey great grandchildren, welcome to bonded indebtedness?” Thank goodness we have a “great leader” in the “Community Organizer in Chief”‘ to lead us to safety.  Speaking of leadership, I came across this from Craig Torres of Bloomberg dated April 17th.

Federal Reserve Chairman Ben S. Bernanke said the collapse of U.S. lending will probably cause long-lasting damage to home prices, household wealth and borrower’s credit scores.

One would be forgiven for concluding that the assumed benefits of financial innovation are not all they were cracked up to be, the Fed chairman said today in a speech at the central bank’s community affairs conference in Washington. The damage from this turn in the credit cycle — in terms of lost wealth, lost homes, and blemished credit histories — is likely to be long-lasting.

The U.S. central bank has cut the benchmark lending rate to as low as zero and taken unprecedented steps to stem the credit crisis through direct support of consumer finance and mortgage lending. The Fed plans to purchase as much as $1.25 trillion in agency mortgage-backed securities this year to support the housing market and is providing financing for securities backed by loans to consumers and small businesses.

Bernanke and the Federal Reserve Board approved rules last July to toughen restrictions on mortgages, banning high-cost loans to borrowers with no verified income or assets and curbing penalties for repaying a loan early. The action came after members of Congress and other regulators urged the Fed to use its authority to prevent abusive lending.

Onerous Restrictions

We should not attempt to impose restrictions on credit providers so onerous that they prevent the development of new products and services in the future, Bernanke said. Regulations should ensure innovations are sufficiently transparent and understandable to allow consumer choice to drive good market outcomes.

Bernanke didn’t discuss the outlook for the economy. Central bankers next meet April 28-29. At their March meeting, policy makers said they saw downside risks as predominating in the near term, according to minutes released April 8.

Lenders, including non-bank financial companies, expanded mortgage and other lending this decade to borrowers with blemished or scant credit histories. Subprime mortgage origination’s rose to $600 billion in 2006, an increase from $160 billion in 2001, according to newsletter Inside Mortgage Finance.

Bernanke said the packaging and sale of mortgages into securities appears to have been one source of the decline in underwriting standards because originators have less stake in the risk of a loan.

I added the bold face on that last statement because I feel it is at the root of this so called financial crisis.  Can anyone spell derivatives?  The further these bets moved from the underlying values of the mortgages they represented, the more the problem compounded.  We have not seen anywhere near the real effect of what these derivatives will do to the markets as they are just beginning to unravel. This is a developing story and I think it will put the “dead” back in the “dead cat bounce” that the general equities have been experiencing.

I mentioned earlier that the gold market may need  an outside event to turn it around and send it forward on it’s next leg up.  I would like to clarify that statement now.  There are so many drivers in the markets these days that you have to be aware of when investing.  Politics and world events are major players in the gold markets and if you ignore them, you do so at your own peril. With that thought in mind consider this portion of Jonathan S. Landay’s piece from McClatchy Newspapers.

Experts predict Pakistan’s collapse

WASHINGTON | A growing number of U.S. intelligence, defense and diplomatic officials have concluded that there’s little hope of preventing nuclear-armed Pakistan from disintegrating into fiefdoms controlled by Islamist warlords and terrorists.

It’s a disaster in the making on the scale of the Iranian revolution, said a U.S. intelligence official with long experience in Pakistan who requested anonymity.

Pakistan’s fragmentation into warlord-run fiefdoms that host al-Qaida and other terrorist groups would have grave implications for the security of its nuclear arsenal; for the U.S.-led effort to pacify Afghanistan; and for the security of India, the nearby oil-rich Persian Gulf and Central Asia, the U.S. and its allies.

Pakistan has 173 million people and 100 nuclear weapons, an army which is bigger than the American Army, and the headquarters of al-Qaida sitting in two-thirds of the country which the government does not control, said David Kilcullen, a counterinsurgency consultant to the Obama administration.

Pakistan isn’t Afghanistan, a backward, isolated, landlocked place that outsiders get interested in about once a century, agreed the U.S. intelligence official. It’s a developed state.

We live in a big bad world full of people who do not have our best interest in mind. These people can change the world in a heartbeat, or the cessation of the same, and will not hesitate to do so if they feel that they can advance their cause.  If you think we are going through economic turmoil and a financial crisis now,  just wait until one of these “peaceful” groups let loose a nuke!

On that happy note, let’s turn to the purchase of gold coins and gold bullion.  Now is the time to be buying gold coins and gold bullion, before the gold market turns around and heads back up. Acquiring on these dips should be your primary objective.  As I get ready to publish this, which I should have done yesterday but couldn’t because of a meeting with my web master, I see that gold is up $15.30 at $884.  Maybe this week will see a change in gold’s direction.  Time will tell the tale at the close and we will look at the news that moves the market at the end of the week.

Til next time, good luck and good trading!

Also Noteworthy:

• Buy Gold Coins and Bullion Now!
• Buy Gold Coins And Bullion on Dips Under $900!
• Buy Gold Coins, Bullion to Hedge Dollar Drop
• Buying Gold Coins as Gold Falls
• Buy Gold on Dips!

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