AGORACOM Small-cap Investor Relations Blog

Spot Price Of Gold

There is a risk in thinking that everyone understands this headline.  However, the fact of the matter is that gold is still misunderstood by most investors, especially in the United States.  Much of that has to do with the fact that gold gets very little respect from US financial media because most “guests” on these shows don’t generate revenue from gold.  Fund managers and brokers typically make their money by selling you stocks, bonds, mutual funds, etc.  because they provide the seller with an easy way to make commission.

Gold and for that matter, real estate, don’t provide financial advisors with an easy way to make commission.  Hence, when you hear advice about asset allocation in your investment portfolio, you always hear it in terms of stocks, bonds and cash.  No gold, no real estate.  You need to understand this if you are to truly understand why gold should be a part of your portfolio (we can talk about real estate another time).

Gold Is Now Being Silently Recognized As The World’s Reserve Currency

1-Year Gold Price Chart

What does this mean? The good people over at Technical Indicator Index summed it up as follows:

Gold hit a new all-time high Tuesday, both on an intraday and closing basis. Why? Gold is now silently being recognized as the world’s reserve currency. Fiat currencies are being printed at will with no accountability. This paper inflation is weakening the purchasing power of world currencies, and the risk of rendering them worthless is rising. Nations have elected to print and spend instead of stimulate economies through investment, tax reductions, and technological advances. Gold is now seen as a safehaven. Our conservative investment portfolio has a concentration in Gold, Mining Stocks, and Silver in anticipation of this fundamental expectation, and in response to technical analysis charts. We believe Gold is going much higher over the coming years.

Bottom line? Most world Governments are broke. Their broke at the Federal, State and Local levels.  The response has been to print and borrow more money.  You don’t need a fancy graph or chart to tell this is going to end badly.  Rather, just imagine what your grandfather would say if he was sitting beside you right now. When you’re broke, you cut spending, stop borrowing and sell assets to pay down your debt.  You make sacrifices and start all over again as best you can. As an individual or small business, this is what your lenders would force you to do.

Governments are no different except for the fact they can photocopy as much money as they need.  That’s fine and dandy in the short-term – but how much confidence would you have in the long-term prospects of someone that kept handing you photocopied IOU’s?

If you understand this concept, then you now understand why investors are losing confidence in currencies and turning to gold.

Regards,
George

Jim Rickards, director of market intelligence for McLean, Virginia-based consulting firm Omnis, was on CNBC recently repeating his very compelling case for gold.   I stress “repeating” because gold “extremists” are typically not welcome on CNBC, yet in an appearance back in September - GATA reported the following –

Rickards was asked to analyze an essay published in the Wall Street Journal by Fed Governor Kevin M. Warsh – the Fed governor who acknowledged to GATA that the Fed is concealing records of its gold swap arrangements with foreign banks.  Rickards construed Warsh’s essay to mean that the Fed will be seeking to regulate the gold price closely even as the Fed needs to devalue the dollar by about half over the next 14 years to restore solvency to the United States.

…… Central bankers, he added, now plan to turn the International Monetary Fund’s Special Drawing Rights into the new world reserve currency replacing the dollar, a new round of money printing to create some stability in the world financial system during the dollar’s steady but gradual and controlled devaluation.

On his latest CNBC appearance, Rickards states that gold should easily reach $2,000 per ounce next year just as a matter of supply and demand.  However, given the fact the United States and China are devaluing their currencies against each other in a game of chicken, gold could start being considered money again, leading to a price between $4,000 and $11,000 to support the big increase in the world’s money supply.

Whether you agree with him or not, his latest CNBC interview is a must watch.  He is articulate and, as you can see from the response of fellow panelists, very well respected.  You can watch Rickards’ comments at the CNBC archive below.

Regards,
George

Great shot.

Gold is absolutely breaking out today.  I can talk about it but a chart is worth 1,000 words … or $1,078 per ounce.

Members of AGORACOM know we’ve been calling for this kind of action for a couple of years now.  Hence, why I started my Gold $1,000 blog posts.  If you’re now a believer in gold, make your way over there to find out about great gold companies and other commentary.

More importantly, AGORACOM Chief Commentator, Peter Grandich has been calling this gold breakout for several hundred dollars now.  He has been unwaivering and uncanny.  In our most recent Friday night show, he stated that $1,020 or $1,070 were buy signals for him … and here we are less than two trading days later.

In a post made just a few minutes before this one, he stated:

In the face of a rising U.S. Dollar and a vast majority of either outright bearish
or weak-knee bulls, gold has just vaulted up to a new, all-time nominal high.
The fact that India has already bought half of the entire amount of gold the IMF
is selling is definitely a major plus.

The bears are in big, big trouble.

For those of you that are yet to discover Peter Grandich and his uncanny market calls, just click here to be taken back to his home page.  His calls have earned his numerous appearances on CNBC, Fox, BNN,Wall Street Journal, and every other major media source in North America, so you should take the time to read what he has to say.

Finally, if you need one place to keep up with a consolidated view of Spot, 24-hour, 30-Day and 1-Year gold prices, make sure to visit and bookmark our gold price page.

Regards,
George