Gold prices: A bad day at the office

Print This Post | Topic: Gold — July 1st, 2010

A strange day indeed where we see both silver and gold prices get hammered, the US Dollar knocked down from 86 to 84.6 on the US Dollar Index, the DOW down 40 points or so and WTI Crude now trading at around $72.66, nowhere to run and nowhere to hide.

As the chart depicts gold prices took it on the chin with a 3.52% drop, the technicals are heading south suggesting that we could be in for a lackluster summer. The summer being all of two months, July and August and in the past we would look to be buying in August, so as we see it the summer is a tad more than one month. If you are a very nimble trader you may be able to come out and go back in at lower levels, but that strategy does not do it for us. We will sit through it and look for bargains should there be a decent dip.

This might help you to keep your sea legs as the bears leap into life and short their fur off, its a missive just in for Jim Sinclair which we think sums up the situation pretty well.

There are times when you must ignore the hedgie madness in the marketplace and revert to why we are doing what we are doing.

The deflation being spoken of today is the catalyst for the coming hyperinflation. The fact is it has been so in all historic examples. The flooding of markets with debt has been brought on for different reasons, but the ways and means of hyperinflation has always been the same.

Therefore it is today’s financial market deflation talk that is the reason why you should own gold.

This continued downturn in business will find government in a panic, not in austerity when their constituency does the Greek dance of panic as the pain on Main Street becomes intolerable. It will.

Contemplate what each of the following means to you one at a time. Do not try to do them all at once. You do not want to do this as a routine memory exercise as much as a meditation on why you have bought the insurance you have.

-Gold is a currency with no liabilities attached.
-Gold is competition to paper currency.
-Gold is not a commodity.
-Gold is a barometer of fear.
-Gold is a barometer of confidence in Government.
-Gold is insurance.
-Insurance is not something to trade.
-Gold is money when money fails.
-Hyperinflation is a currency event, not an economic event.
-Hyperinflation is a currency event described as a loss of confidence in the currency.
-Gold in your hand eliminates counter-party risk.
-Gold is the high ground when the global tsunami hits.
-Gold removes financial agents between you and your assets.

Be strong in your conviction and do not be bothered by the return of the Prechterites and top callers.