Is Gold Money?

Is Gold Money?

It was interesting listening to Ben Bernanke's testimony yesterday at Congress.  The Chairman of the Federal Reserve Bank of USA do not think that gold is money!

Wait a minute! Why then do Central Bankers hold gold as reserves all these years?  Mr. Bernanke thinks Central Banks of the World holding gold reserves is due to tradition!  Watch his testimony here :




Silver has been used as money since the earliest civilisations.  History has documented how gold has thrashed fiat currency time and time again.  Currencies of the past has lost it value but gold is still accepted across land and time.

Former FED Chief Alan Greenspan, (Ben Bernanke's predecessor) had this to say :
"Fiat Money has no place to go but GOLD!"

So, my friends.....
GOLD is MONEY!!!

Are we going to see Silver Move Into Record Highs?

This is the start of the next big leg higher in the precious metals.  We’re at a new record closing high in gold today, that is extraordinary considering it is happening against the headwind of a stronger dollar.  There is an important message here, money fleeing the Euro is not just going to the dollar, it’s flowing into the metal of kings.

People are recognizing that the only true safe haven is the precious metals.  There are still so few people talking about gold and silver having an explosive summer.  The fact that there is still so little bullish sentiment just reconfirms my view that gold and silver are ready to rocket higher. 

Policy-makers on both sides of the Atlantic still don’t get it.  They don’t understand that the problem is too much debt.  You can’t solve a debt problem by piling on more debt.  Greece is bankrupt, as is Ireland and half of the European countries.

Most of the big banks over there aren’t much better off given that their portfolios are chalked full of bad sovereign debts.  But the same thing is true on the other side of the Atlantic Eric.  Policy-makers in the US can’t even agree to make spending cuts in the future, let alone where they should be made which is right here and now in order to reduce government spending and the burden it places on the wealth-creating private sector.

We’ve seen yet again that support for silver at $35 was tested successfully.  This is a huge and powerful base and with gold already probing record highs, silver won’t be far behind.....  

One never knows exactly how the markets will unfold, but my sense is that we only have several more days of silver in the 30’s.  Once silver clears $38 on a closing basis, you are going to get back into the mid 40’s in a heartbeat.

I am beginning to see the strength in the gold mining shares over the last few trading sessions.  Both the XAU and HUI are within their multi-month trading ranges, but look for both of them to begin probing overhead resistance which would be the 225 area for the XAU and 560 for the HUI.  It’s important to note that the HUI is only 3% away from that level, which could happen tomorrow if we have another big up-day like today.

The action in gold and silver so far this summer indicates that this is in fact poised to be explosive on the upside.  Nobody is talking about this, but it could be a reality in short order.  Here it is nearly 30 years after the breathtaking summer of 1982, and I think history is about to repeat all over again.

Why you should Buy and Hold Gold

Growing Demand for Gold

On June 13, the CEO of Newmont Mining (NYSE:NEM), the world’s second largest world gold producer, expressed his expectations of gold hitting US$1,600 this year, and higher next year. UBS Investment Research goes out on a limb with near-term projections: its one-month gold forecast dropped from $1,500 to $1,475, but its three-month projection is up from $1,400 to $1,600. GFMS projects that gold will reach around $1,620 by the end of this year.
Standard and Poor’s projections remain stubbornly lower, in spite of having been way off target for half the year; yet they did raise their forecast for the remainder of this year from $1,100 to $1,200 per ounce.
Overall, analysts and market players are quite optimistic about gold. Here’s why.
First, there’s robust jewelry and investment demand from Asia, China and India in particular. High inflation and lack of reliable alternatives to preserve wealth are directing financial flows of a burgeoning middle class into gold. In 2010, China and India accounted for 51% (around 1,570 tonnes or 50.5 million troy ounces) of the world gold consumer demand; this year it’s 58%. Investment demand for gold bars in China is flourishing as well. It more than doubled, from 41 tonnes in Q1 2010 (1.3 million troy ounces) to 93.5 tonnes (3 million ounces) in Q1 2011.
As a mental exercise, consider this: if the demand keeps growing at the same rate as it did in the first quarter of 2011, we may see overall 2011 growth at a surely market-impacting 20.9%.

Second, investors in the United States consider gold as a safe heaven, the need for which is driven by sovereign debt crises and loose fiscal policy in the U.S. According to World Gold Council data, bar and coin investment demand in the U.S. continues growing: from Q1 2010 to Q1 2011, it has surged by 54% (from 469,400 to 723,400 ounces). “Fear trade” is still the name of the game here as risk aversion borne by the fears over Greece’s default dominates global markets and European banks turn net gold buyers for the first time since the inception of the euro. In the U.S., jobless claims remain high, albeit somewhat lower than their April peak, the country’s current account balance demonstrates a widening deficit, and consumer confidence fell to a two-year low.
In this environment, betting on gold as a safe haven becomes the way to go. High demand for gold in Asia has roots both in culture and in the current economic conditions: inflation across developing economies and the overheating of Chinese real estate market specifically. As Chinese authorities try to battle the real estate bubble by putting price controls on housing, the sector becomes less attractive for investment, which spurs demand for other asset classes, including gold.
European and U.S. economies are far from overheating, as the factors we mention above constitute a rather dire economic picture. But whether fear comes from overheating or underperforming, fear drives people to gold.