This morning’s opening in New York brought with it some modest selling by participants ahead of the US Labor Department’s August jobs data. The principal take-away number was the decline in US unemployment to 8.1%.
What we are seeing here is a classic war between the fundamentals and liquidity, and liquidity is winning. Ben Bernanke and his central banker friends around the world have orchestrated a crescendo of printing presses that have kept the hopium coming and stock prices rising.
September has always been a high volume month. This week the holidays end. The money professionals get back to their desks and look into their crystal balls. What will they see, apart from this bowl shaped chart of the gold price?
You never can be guaranteed success in investment. Patience and a lack of borrowing always buys you time and that is the greatest asset of all. But we think those who stick with silver over gold will get their pay day soon.
As the price of gold has gone up fivefold over the past 10 years, why would one buy it at today’s prices? For the same reason an investor would buy any other asset: if one believed it would be a good investment now.
To make its position tenable, the Establishment ignores the history of fiat money, which derives its value from government decree but nearly always ends up worthless. Paper, although a useful commodity, is cheap and has long been governments’ preferred fiat money.
Over the past several months, the markets have tested investors’ conviction to gold. But in the ongoing euro crisis, we won’t know the details of how Europe will clean up its debt mess for a while, but we’re pretty confident the story ends well for gold.
We appear to be in a period where the gold price will not run away quickly anytime soon, but we are also in the midst of a long liquidation of the metals as the central banksters keep accumulating gold at lower prices. So, where is the selling coming from?
When we last visited this price area on gold in December 2011, I challenged the loud-mouthed gold bears to wager $1 million dollars on gold hitting $2,000 before $1,000. I offered the world’s worst gold forecaster and the “Tokyo Rose” of the gold market to double that bet.