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Gold Quietly Marshalling Strength

September 2, 2009 by  

Gold Quietly Marshalling Strength

The gold market is just exiting the summer slowdown.

Simply put, the world has been on vacation. Yet, despite the inattention, gold has been quietly building strength throughout much of the summer. The month of July, for example, was quite good for gold, as the metal steadily rose before meeting resistance at around $955.

Still, as we enter the fall, it seems as if gold is sitting tight on a very strong foundation. The market continues to anticipate the return of physical demand in September, along with the impact of America’s loose-money policies and stimulus spending.

Some forward-looking speculators have already entered the market in anticipation of these factors kicking in, but there is still plenty of room left for more longs before the market could be considered crowded.

In the meantime, the large commercials, as our talented associate Gene Arensberg has been reporting in his “Got Gold Report” for Gold Newsletter readers, have been piling up their short positions during gold’s summer rally. But once the dollar begins rolling over again, these commercials will be in an increasingly dangerous position.

As I’ve noted before, these guys are usually right. But when they are wrong, they are spectacularly wrong.

In the past, when the commercials have been forced to cover large-scale short positions, gold has exploded higher to a new price plateau. As an example, consider late 2005, when the commercials were caught badly offsides, and gold catapulted from $450 to over $700.

I’m not saying this will happen anytime soon, but, with federal deficits now measured in trillions of dollars, with deficit- and debt-to-GDP ratios rising to levels that presage at least a doubling in long-term interest rates, and with proposed nationalized health care programs that would further inflate the national debt, the prognosis for the dollar is not good.

The federal debt is already far beyond manageable levels. The only way to control it at this point is to inflate it away. And investors know it.

As I said months ago, it seems we’re on a collision course to repeat the mistakes of the 1970s. But this time, “it will be like the ’70s on steroids.”

In the meantime, many of the resource companies we’re following are making news with their summer exploration programs. At the same time, there have been significant developments on the mergers and acquisitions front, as challenged companies merge to build strength through synergy, and as weak companies are consumed by the strong. Our readers have already multiplied their money on a number of these stocks, and there will undoubtedly be more to come.

It all adds up to an uncommonly interesting—and potentially profitable—market ahead.

Brien Lundin

is the editor and publisher of Gold Newsletter, a publication that has ranked among the world's leading precious metals and resource stock advisories since 1971. To learn more about Gold Newsletter, visit www.goldnewsletter.com. Mr. Lundin is also the host of the famed New Orleans Investment Conference, the world's oldest and most respected gold investment event. To learn more, visit www.neworleansconference.com.

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  • DaveH

    I know this is off-subject, but I wanted to put this video where it might get a lot of traffic. I haven’t seen this mentioned much on the news, even Foxnews. This is unbelievable. Who are the racists? The Democrats can’t stand for anyone getting away from the dumbing-down of the propaganda schools.
    http://reason.tv/video/show/777.html

    • DaveH
      • Laurie Bluth

        Hi Dave, thanks for putting this up (DC Voucher Program). It was actually featured on Glenn Beck’s program for several days right after it happened and he is still mentioning it occasionally. But it is good to have it available for others to take note of. I find it very interesting that we can spend millions bailing out businesses, but nothing on struggling students – what’s wrong with this picture?

  • s c

    For generations, we have been told time and time again by our government and many economic ‘advisors’ that gold isn’t worth it as an investment. Some of them even called gold a ‘barbaric relic.’
    Isn’t it interesting that around the rest of the world gold is a time-honored investment. Only in the US can you find ‘responsible leaders’ who want us to ignore gold (full faith and credit in WHAT?). Why, it’s almost as though this crap about gold was engineered to keep us ignorant and potentially destitute. Gasp! Some might even call it a conspiracy!
    Well, folks, it IS a conspiracy. Any ‘leader’ or ‘advisor’ who poo-poohs gold is a liar and a willng stooge for those who have been doing their worst to destroy the dollar ever since the Fed was rammed down our throats. See the stinking #@$5@&*$ for who they are and what they’re trying to do to us.

    • DaveH

      The problem we have is to convince those who have stars in their eyes. When someone lusts after somebody else’s money, they don’t want to hear anything that might tarnish that dream. They accuse those whose money they want of being Greedy, yet turn a blind eye to their own Greed. The Liberals fancy themselves as compassionate for wanting to share the money of others. True compassion comes from one’s own resources.
      Meanwhile the leaders, the only true beneficiaries in this case, are rubbing their hands in glee as their blindfolded followers chant “Heil!”.

      • eyeswideopen

        Dave, still reading the book, but what I gleen from it, is that we should be against public vouchers as we should find a way to put our children in private schools ourselves. Is that right? No government assistance, be self sufficient?

        • DaveH

          You Bet Eyes. But due to political realities we have to accept less. If this were a Libertarian society you would be correct, but since it isn’t we have to seek less government intrusion wherever we can get it. Of the few voucher programs that I have read about, the voucher amounts are no more than what the public schools spend on each student. What we are talking about here is ‘choice’.
          My parents sent us to private catholic schools through 9th grades. They got absolutely no help on the tuition from the government (due to the separation of church and state bull), plus they had to pay taxes to send other peoples’ children to public schools. I could understand the government (local in this case) not wanting to pay for the religious portion, and therefore prorating the help, but they gave no help.

          • eyeswideopen

            So Dave, who decides what government intrusion is acceptable and what type of help is allowed… Do we have some board of directors telling us what to do?? Sounds a little funky to me.

          • DaveH

            We should have as little government as possible. I am content with following the guidelines set up by Constitutional Law. There is little doubt in my mind that free markets would give us prosperity beyond our wildest dreams. The main scope of government should be to protect people from the force of others, and to protect people from fraudulent activities. Otherwise, voluntary contracts would be the rule of the land.

          • eyeswideopen

            Dave, so the courts and military still function correct? How are they funded? Is it all the present courts or is it a new system? Will we be paying for our childrens education at the below college level? More question coming. lol

        • DaveH

          Also Eyes, my personal feelings are that education is overrated. I have about 7 years of higher education, and I would trade my assets with those of my brother-in-law (now divorced from my sister, lucky guy) who only graduated from high-school. Much if not most of our education consists of subjects that we will never use again. Many people in our society would be much better off to get jobs early-on and thereafter seek job-related education. Imagine all that wasted money that could have been used for better purposes.

    • BOE

      SC so what are you suggesting? Sould I buy gold? Right now at about 950.00 an ounce plus fee`s..how do you make money later on? I just have a hard time understanding this. Now gold is the highest it`s ever been..so why buy now? What if it goes down..which it will? Coin,bars,or mining stocks? Any suggestions ?Thanks Boe

      • s c

        What you see and what you think you see are two different things. Many groups have been depressing the price of gold for years. By the way, this is a prime example of the absence of a free market system.
        Our government has played no small role in the artificial depression of gold. How is that possible? When you’re flogging a dead horse (the dollar), your main defense is to depress gold.
        Governments aroud the world are walking away from the dollar [we can thank the Fed for that]. Many people can’t afford gold. If you can’t, then invest in silver. It, too, has VALUE.
        Be prepared to barter. Think in terms of survival. Our government will toss us aside when it is ‘convenient.’ People who are prepared (independent) will survive. Those who are part of a herd mentality (“but none of my friends are doing it”) won’t.

        • Harry B

          Invest in micro-cap companies that are producing silver and made in the U.S.A.,Itronics ,ITRO, IS ONE OF THEM AND USING GREEN TECH TO GET IT.The little guy can afford to buy in on these great companies and reap the rewards, before silver cannot be bought by the little investor.check these American companies and see if you think this can help you and at an affordable price.DO YOUR HOMEWORK AND SEE IF YOU AGREE.

      • DaveH

        BOE,
        My feeling right now is that Silver would be a better investment. Gold is primarily a consumer good, Silver is primarily an industrial good. For that reason, once the economy improves, Silver is more likely (in my opinion) to rise faster in value than Gold will. Both would be good inflation hedges, but I think Gold is more susceptible to confiscation Roosevelt-style than Silver is.
        Any hard asset is better than cash in inflationary times, but each carries its own pros and cons. Real estate can be an excellent hedge against inflation particularly if you are leveraged (borrow from a bank) as you will be paying off the loan with cheaper dollars after inflation and the nominal value of the home will be increasing. The problem with real estate is the big cash outlay and the lack of easy liquidity. Also with real estate you may be risking confiscation if politics turn far-left.

  • http://cfl.rr.com Coming Your way

    BOE needs to study economics via Larry Bate’s book “The New Economic Disorder” and G. Edward Griffin’s “The Creature From Jekyll Island”
    and he will be calling to buy all the gold and silver he can afford!

  • Chris

    So suppose i take my savings, 401 contributions, etc. and invest in gold. How do you spend it? Are we going to collapse to a point to where we will be trading/bartering, and precious metals will be the medium we use? And i suppose i need to buy something i have in hand, not a paper promise right? So does that mean coins?

    • DaveH

      Chris,
      There are so many factors involved in your question that I would suggest you do a lot of reading about inflationary solutions. Personally I encourage my relatives to invest 20-50% of their cash savings in silver. The important part for you is to understand the mechanisms of protection against inflation and then decide what hard asset or assets you would choose and what percentage to leave in cash for liquidity purposes. A good place to start would be to allocate a portion of your assets in a mutual fund that primarily invests in natural resource companies.
      If you invest in precious metals, you have to think about the possibility of confiscation by government, especially if they are in the form of US currency. My understanding of the Roosevelt Executive Order is that the people were reimbursed for their gold coins at face value, thus a fifty-dollar denominated Gold-Eagle coin would get you $50.00 whereas you paid over $1000.00 (current cost) to purchase it. It sounds very paranoid, I know, but I’m sure the people thought so before Roosevelt’s order also. I personally would feel much safer buying silver-rounds (no currency denomination) in small enough amounts to avoid the reporting requirements that our freedom-taking government has imposed on the dealers.
      http://www.the-privateer.com/1933-gold-confiscation.html

      • s c

        DaveH, please remember that FDR is the manipulator who signed an executive order forcing Japanese Americans to go to internment camps. FDR’s confiscation of gold was an unconstitutional power-play. By NO definition does FDR qualify as a saint or someone who did his duty to ‘take care’ of America.
        FDR was the precedent-setter for all of the immoral, disgusting behavior that we’d endure from Congress after he died. How did he deserve the benefit of the doubt back then? How does he deserve any benefit of the doubt now?
        Now that we have FDRII in the White (and his all-seeing side-kick, motormouth joe), we dare not get caught with our defenses or our common sense down (again). With people like comrade b o and lord haha
        biden in the White House, America wins or loses. It’s that simple.

        • DaveH

          SC,
          You misread my statements if you think I support FDR in any way. I believe he set in motion the mess that we are currently in.

  • s c

    If you have a 401k plan, BEWARE! If you know someone you can TRUST with your money (someone who will tell you the TRUTH, no matter what), ask questions NOW.
    Our government is hunting for piles of money just waiting to be ‘appropriated.’ An easy way for them to do it would be to ‘merge’ every 401k plan with social security. If they do that, b o
    will have another ‘bailout’ source for any new scheme he can think up.
    DO NOT get advice from mainstream talking heads who helped create
    part of this economic disaster. It’s your money. It does NOT belong to
    the government – regardless of what b o says or thinks.
    You will either hang on to your wealth, or watch as your government
    re-distributes your wealth to those who need it ‘more’ than you. Think of your 401k as a stash of gold. There’s a new FDR on the prowl, and
    he LOVES easy targets -especially when they trust this government.

  • DaveH

    These liberals are so excited to take away our freedom that they can barely contain themselves:

    http://blogs.healthfreedomalliance.org/blog/2009/08/30/swine-flu-natural-pandemic-or-man-made-pandemonium/

  • DaveH

    This is creepy. And I have heard that some schools have aired this film to the children. It sounds so sweet in the beginning (the hook). I Pledge to boycott Ashton Kutcher and Demi Moore films:

    http://www.youtube.com/watch?v=51kAw4OTlA0&feature=related

    I’ll bet the Liberals absorbed this film in a peremptory stupor.

  • TxDC

    I agree wity you s c. What are “silver rounds” with no denomination? I assume they are not like silver dollars? My father used to tell me all these things back in the 50′s and 60′s. It is amazing how Americans have been brainwashed into believing a “conspiracy” is ridiculous while it has actually been going on since 1913 or before. Some are so blind and bewildered, after ignoring the fact that we haven’t been following The Constitution since about 1937, now they want to believe they couldn’t have been so blind. It’s terrible that they won’t look close enough to learn the truth about this ilegitimate president. We need all real Americans to wake up and quit being blindsided by this Socialist regime that has taken over America over the past 30-40 years. WE are the ones who are going to have to stand up and fight for our Constitutional Republic form of government. ‘Democratic’ is a word that only is used to cover up ‘Socialistic’, just as “Progressive” used to be called “leftist” and “liberal”. The sooner Americans can admit they have fallen for the greatest scam in history, the sooner we can stick together and take America back! Look up “NESARA” or go to newswatchmagazine.org and read, and when you say, “Oh, that’s crazy and can’t be true!” Follow the references they provide for you to look up the documents, etc to prove it is true.

  • Harry B

    For about 139.00 you can buy an 5-ounce silver bar at Itronics-itro and you can invest in this American company that is still micro-cap. you can still afford to buy silver and it is very hard to buy gold at the asking price today.The little guy has a chance ,if he does his homework and follow up on these American companies that have been in business for many years and invested money in the co. and the people in that state who work to accomplish the goal to serve and keep these companies going into the future.Check out American companies that can produce silver and gold and help them, buy investing in American Companies.or buying from them while silver is still affordable.Ounces is the weight of the silver and gold,denominations are the value you can buy a product with.

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