Time To Buy Gold!

February 13, 2009 Global Economy, Market Updates, Physical Gold No Comments

During times of crisis it is time to buy gold. Gold is the backstop of financial security and as our government runs amok, it is time to buy gold!

Friday the 13th rolls onto the scene and the markets take a breather to reassess the situation. The Dow is virtually unchanged at 7,932, the NAS is up 8 at 1,549, the dollar is up .012 (.02%) at 85.92 and gold is undergoing some profit taking, down$10.80 at $936.40.

The time is right for everyone to take stock of the situation before the next moves are made. The reoccurring risk aversion theme is benefiting the dollar, as investors buy into the perceived safety of the currency as stocks fell after Secretary of the Treasury came out with his totally inadequate “trust us on fixing the economy” speech. We have heard from the Bozo’s in Washington that we must act quickly because inaction will exacerbate the problem. Their total lack of understanding of the financial markets and their rush to impliment their political agenda is what caused the problem. Let the free markets correct on their own! Take the pain now rather than delay and distort it in the future.

Gold Reacts To The Crisis

The data coming from the ETFs, which are at record levels, points to the strong investor demand for gold. Normally a strong dollar weighs on gold, but recently this relationship has been strained and investors are moving into both the dollar and gold as safe havens to escape risk. As we move further into this financial meltdown gold and silver will be the last standing survivors in the risk aversion race.

Buy Gold, Not Debt!

I have long held the position that gold, and when I say gold I include silver along with it, will be the foundation of a new currency after the financial system melts down. I don’t mean that we will be walking around with gold coins in our pockets when we go to the market, but that whatever script we exchange for goods will be tied in some percentage to precious metals. It is inevitable because none of the actions taken by our government, or any of the rest of the global governments, will be able to undo the effect of the nearly $90 trillion of derivatives that have polluted the financial system world wide. The system is broken and all the governments programs and their pork will not fix it.

At a time when we need leadership and vision, we are stuck with amateurs and ideology! All we can do is prepare for the future and then wait to see if rational thought will once again prevail and set the country and the world for that matter, on a sane course when the dust settles. Some say that the passage of the “stimulus” bill will mark the death of capitalism, but I feel that it may mark the end of socialism. It is ironic that as the U.S. slides into socialism, most of the countries of the rest of the world are turning away from it.

Buy gold and gold stocks on every pullback because gold is real money, not debt! Gold and silver stocks will, because of leverage, out perform physical gold in dollar terms, but a bird in the hand is worth two in the bush, so it is always wise to have gold in your possession in case the paper markets become illiquid due to market failure or government intervention.

Till next time, good luck and good trading!