Gold Investing

Gold investing is critical to your financial future.  The FED under Bernanke is a pawn to the tax and spend policies of the Obama administration.  Politicians talk a strong dollar while they are busy throwing it under the bus.  At this point in time, gold investing may be the only profitable investing on the horizon!

What an interesting week in the gold markets.  Things are heating up and volatility is becoming the norm.  The basic foundation of the dollar is being shaken and it is scary in it’s implications for gold and for life as we have become  accustomed to it.  “Change” is in the air and it is pretty scary.  Before we get started I want to say Happy Halloween and set the tone with this scary video.  Truth is stranger than, way scarier than, fiction!

The latest health care bill introduced by the Democrats is 19,900 plus pages of convoluted legal language that guarantees a single payer government controlled health-care system within 13 years.  Forget the political promises and the CBO cost estimates, this bill will put the last nail in the coffin of the U.S. dollar.  We do not have the money for this, even if it were truly about health-care and not about a dramatic power grab by left-wing Marxists. If you are not completely scared out of your wits by now, you had better check your pulse.

Volatility Is Now The Norm For The Markets

Volatility is now the norm as witnessed by the markets this week.  People are beginning to realize that few to no jobs have been created in the private sector.  This is a critical problem for the economy because private sector job growth is what drives the consumers spending.  No jobs equal no spending and without consumer spending, this recessions is going to hang around a lot longer than most expect.

Gold did very well this week considering the volatility in the markets.  The DOW started the week at 1o,050 and ended at 9,712.73, down some 330 points based on the flavor of the week rumors on the the condition of the recovery.

The DOW rally is showing weakness as more and more investors are finding that the government figures are coming from cooked books.  Something is not right here and apparently the fish stinks from the head.  No insult to fish intended.

The dollar is doing everything that it can to hold .76, but the dollar’s hold on that level is becoming tenuous at best.

The dollar may have put in it’s rally this week.  Technically it was getting pretty oversold, so this bounce was to be expected.  The question now is, can it drive through .76 and stay there?  I don’t think so!

Gold bounced around from Monday through Friday but there was a significant change on Friday.  Check out the daily action in spot gold and see if you can see anything of significance.

Thursday’s is the key chart. Gold rose significantly while the dollar was rising, up $18.10! If this becomes a trend, then gold will be ready to go after $1070 on it’s way to $1,100 and beyond.  It is a question of when this occurs, not if.  There is no sign of fiscal responsibility on the horizon that will alter this picture in the near future.

Is Good News Bad For The Dollar?

For the past six or seven months, the dollar has been hammered every time apparent good news surfaces regarding the U.S. economy.  What gives?  The current thinking is that the U.S. economy is in worse shape than those of the rest of the world, so if the U.S. is turning around, Europe will get there quicker and that means investors will put there money into the economies that are leading the way.  Investment will move from lower yielding assets to higher yielding assets in this global economy.  The days of the U.S. driving the world economy appear to be ending.

Why Is The U.S. Economy Lagging The Rest Of The World In This Recession?

If you are a conspiracy theorist, you will say that the administration’s policies are designed to keep the U.S. down.  Two years ago I would have laughed at that, but now it is beginning to make more and more sense as you add up the non-stimulus bill, the health-care take over, the head in the sand lack of an energy policy and the cap and tax bill.  One thing is for certain, this administration could care less about a strong dollar because they are devaluing it in order to keep spending.

Is The Federal Reserve Coming To The Dollar’s Rescue?

What has Ben Bernanke done to protect the dollar, fight inflation and encourage full employment?  In a word nothing!  In the old days, one would point out that the Federal Reserve had nothing to do with the e Government. Today the FED is just another wing of the government that just happens to be able to pull money out of printing presses and spread the dollars around the world at the whim of its boss, the Federal government.

You can put  Ben Bernanke’s spending binge in perspective when you realize that the FED under Bernanke has spent more money than was spent during WWI, WWII and the New Deal combined.

The Federal Reserve exists for one and one reason only. It exists in order to create all of the dollars that the Federal Government wants to spend.  The Federal Reserve is exceptional in its ability to fulfill its only function, so much so that the U.S. is rapidly approaching bankruptcy.

While “Helicopter Ben” is dropping money into the system by the boat load, he talks out of the other side of his mouth as he warns of the consequences.

“The United States must increase its national saving rate. Although we should deploy, as best we can, tools to increase private saving, the most effective way to accomplish this goal is by establishing a sustainable fiscal trajectory, anchored by a clear commitment to substantially reduce federal deficits over time.”

In reality, talk is cheap and Chairman Bernanke is doing nothing to strengthen the dollar.  He spouts platitudes while he scurries headlong down the monetization hole.  It would be so much better for the U.S. and the world if we could turn back the clock and stop this run into ruin, but the odds do not favor that at this point.  Gold and silver offer the only hope for preserving some semblance of wealth as this strange new world unfolds.  Protect yourself and your family by purchasing gold and silver bullion coins on pullbacks in price.  Don’t get wrapped up in the day to day machinations of the markets, but rather focus on the long range and you will do well.

This next piece puts an exclamation point on the where, what and why that is driving the gold market today.  I have put in the complete article because I feel it is a must read article if you want to get a handle on the variables that affect the price of gold. If you want to read more Al Korelin, go to www.kereport.com

By Al Korelin

There is an interesting difference of opinion among my colleagues regarding the reasons for the current escalating price of gold. The vast majority are in the camp that believes that we are in a gold bull market that will remain intact for the foreseeable future. The other group maintains that the weak U.S. dollar is indicative of a bear market in that sector and that the escalating price of gold is simply a result of that condition.

The proponents of the weak U.S. dollar argument point to the fact that just a few short months ago the dollar was valued on the index somewhere slightly above 85 and today has dropped in value to under 76. A fifth grader can tell you that this represents a decline in value of over 10%. If that same fifth grader also examines the price of gold during that period, he or she will point out that the value of an ounce of the precious metal has escalated a bit under that same 10%. Who can argue with those numbers?  The bears point out that there has always been an inverse relationship between the respective prices of the U.S. dollar and an ounce of gold and that this relationship is simply showing itself today.

To disagree with this would be idiotic because numbers do not lie. But, in this case do they tell the whole story? I don’t think they do.

Historically, international/political turmoil has been an important factor regarding the direction of the price of gold. Depending on your point of view, the relationship here is also an inverse one. When there is little turmoil not much, if any, upward price impact is evident and vice-versa. Today, the world is an interesting and scary place. Consider the following.

An alliance seems to have formed between Russia, China and Iran. The Russians and Chinese have told the U.S. and other countries that they do not support any type of economic sanctions against Iran resulting from its non-compliance with international nuclear agreements.  This statement tells me that they would support Iran should it become involved in any type of conflict.

Israel is feeling, and rightfully so, threatened both by Iran’s vocal ill feelings toward it and by the evolution of Iran’s nuclear program.  We saw what happened in Gaza when the Israelis finally got fed up and, by their actions, made the statement that, when threatened, they would respond with significant force. The destruction of the Palestinians living in Gaza by the Israelis was, as the United Nations said, devastating. Can you imagine what kind of strike against Iran would occur if and when the Israelis feel really threatened by them?  The destruction in Gaza will prove to be child’s play in comparison. And then, what will Russia and China do?

I believe that Russia, China, the rest of the Middle East and, possibly, North Korea would support them. Then what? Let me tell you, the implications of that situation are terrifying.

Economic turmoil also has an inverse relationship with the direction of gold’s price. Let’s now consider just our little world, the United States, where economic turmoil is higher than I have ever seen it in my lifetime.

• Unemployment is officially just under 10%. If you believe, John Williams of Shadow Government Statistics, the number is actually about 20%.
• Inflation is officially less than 2%. Again, John Williams disagrees. He says the number is about 6.5%.
• The federal budget deficit is now the highest in history. To make matters worse, the ultimate passage of some variation of the President’s medical bill will increase that by $1 trillion, say the opponents of the bill.
• The U.S. dollar is losing its status as the world’s reserve currency.
• Consumer confidence is low.

The list of economic turmoil in our country goes on and on. Americans and, for that matter, folks around the world are concerned and their concern is evidenced by their gold purchases.

So there you are. It really doesn’t matter who is right the dollar bears or the gold bulls. For once, they are all going in the same direction.

It’s time to see what the little goblins are doing as they come to the door this evening.  The real monsters in Washington are just to scary to dwell on for long periods at a time.  They are truly the Saw movies only directed at our personal liberties.

I hope you have a Happy and Safe Halloween.

Till next time, good luck and good trading!

Also Noteworthy:

• It is Time for Gold Investing!
• Gold’s Next Move
• Gold and the Dollar
• The Future Of The Dollar
• Buy Gold Coins, Bullion to Hedge Dollar Drop

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