Posted on 08/04/2011 8:57:51 AM PDT by SeekAndFind
Every day is a good day to buy gold of late. It's an intoxicating state of affairs for those of us who already own the barbaric metal, which is exactly the problem. Being inordinately giddy over an investment, what Tony Montana called "getting high on your own supply", generally ends quite poorly.
The question isn't so much whether or not gold has worked. It has. The question is if it's too late to enter or if this is a prudent time to take some profits. With the fundamentals widely understood, Breakout turned to technical analyst Peter Lee of UBS to give us the picture from the view of a chart analyst. His opinion isn't likely to sober up the bulls.
"Gold is headed higher," Lee says. "Gold is a great call. We don't think it's speculative at these current levels." Discounting for inflation Lee sees the most precious of metals heading into the $2,000's.
His view gets slightly more bullish, at least for a trade. "Historically the last move up on a commodity based rally is a parabolic move." Are we entering that portion of the gold rally now? Hard to say. Gold has moved away from it's trendline and moving average but hasn't done anything resembling the spectacular spike silver made in April. Since gold's rally started, notes Lee, gold has repeatedly tested its uptrends and moving averages and held every time, leading to ever rising moves. Lee isn't betting against it happening again.
Touching on Silver, Lee sees it consolidating its multi-year move in a range from the mid-30's to low-40's. He says these are your levels to watch for a short-term trade. But the long term outlook is for a big move higher, that eventually sees silver prices climbing to $100/oz.
(Excerpt) Read more at finance.yahoo.com ...
Where the top is is anybody's guess...
For patient investors just buy Gold now as far as Peter Lee is concerned.
Lee's bottom line: Buy gold on dips, or just about any day. Don't bother making it complicated by trying to do so in non-dollar denominated currencies (e.g. buying gold in Euros as a bet that the Euro will drop faster than the dollar). Buy the SPDR Gold Shares etf (GLD) for the liquidity.
Physical is the only way to go, IMO.
What about exchange-traded funds like GLD and SLV? It’s not always easy for the small investor to own physical gold and silver.
Have been buying physical gold and silver for the past 8 years.
Family and friends have told me they would like to invest in gold but can’t afford it. They don’t realize that physical gold is available in smaller amounts (1 gram, 2.5 grams, 5 grams, 10 grams, etc.). Haven’t purchased any gold recently, but believe there are several small gold refineries selling 1 gram of 24K gold, with assayers certificate for around $70 - $80 at present.
If the US were on the gold standard, how much would an ounce cost? I know it would be ridiculous, but I’m just curious.
See post #4.
“Lee’s bottom line: Buy gold on dips, or just about any day.”
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“Just about any day” is right.
The huge and undeniable megatrend of the ongoing trashing of the dollar makes timing the purchase of PMs a relatively moot point.
Gold and silver physical, the REAL safe haven!
Thanks for that info, but how does one take a gram of gold to the supermarket to buy groceries? I’m just wondering about the relative ease of cashing in that gold vs. the selling of shares of GLD, which can be done in an instant through an online brokerage account.
If you take the 14T national debt and divide by the 288,000,000 ounces they say there is you get abt 49,000 dollars per oz.
But they just bumped the limit, so if you take 16.8T and do the math you get about 58,000 dollars per ounce.
And these numbers for debt are not counting the unfunded liabilities like SS, etc.
RE: It’s not always easy for the small investor to own physical gold and silver
Why not? If you have the money to buy ETF GLD and SLV, what’s to stop you from buying physical?
APMEX, KITCO and GOLDLINE are just some of the places where physical gold and silver can be bought.
The purists don’t like those funds, they are backed by derivatives, not REAL gold or silver. In fact, the general opinion out there by purists is that these funds were made to draw off the pressure on the physical and keep the prices down.
If you wish to play the stock, just know that some people will be able to withdraw the physical from these funds, but that buyer will need a large stake in those stocks to do so. And when those large holders want THEIR physical, guess what happens to that stock? Down it goes.
Start with silver. Start small. Do it with a long term perspective. That is how I survived the brutal drop in 2008. We had bought in the summer, and down it went. We still have that physical.
Thanks. That’s even higher than I feared.
“Thanks for that info, but how does one take a gram of gold to the supermarket to buy groceries?”
Ok, I know you weren’t asking me, but I felt like I should answer. The Answer is: “You don’t....yet.” Using gold and silver is becoming more and more popular (6,000 years is hard to shake). In Utah, it is now recognized as legal tender, but for now, only U.S. minted gold and silver coins (Eagles). In Idaho, you can now pay your state taxes in silver (for sure) and gold (IIRC). Farmers in my area accept gold and silver at the farmer’s market (An ounce of silver will buy 3 weeks worth of baskets from one, and an ounce of gold will buy you one years’ worth of produce from the same farmer, as one example).
The fact is that the use of gold and silver as barter are steadily moving up, and for use as currency is on the uptrend. Now, that having been said, most do not buy precious metals for daily shopping, but the same can be said of ANY OTHER investment. Also, you can sell physical gold and silver at local shops, usually at spot or just under, but there are advantages to cash, debit and precious metals, and drawbacks to all.
But with a guaranteed loss in cash, and no certainty in an ETF (they’ve sold more than they’ve got), PM’s are the way some people wish to go. There’s inherent flaws in ALL currency, but people have gone to gold and silver for thousands of years for a reason (Men like women and women like shiny things). To each his own.
“...but how does one take a gram of gold to the supermarket to buy groceries?”
If it is going to be like Argentina, you don’t. You take it to the black market, or if things aren’t totally out of whack, you take it to the coin dealer and exchange it there.
The value is in the historical truth that when fiat money is losing value, gold and silver will keep theirs. The same amount of dollars will buy so much groceries today, will not buy those same groceries next year.
Bulliondirect.com (I have no affiliation), is also one of the best bullion dealers in my opinion (have worked with them), and are quite a bit less expensive than anyone I’ve found. If anyone happens to be interested, “Inflation.us” has a review of the major bullion dealers, here:
“The value is in the historical truth that when fiat money is losing value, gold and silver will keep theirs.”
Absolutely correct. I did a price comparison a few months ago. While dairy, meat, bread, etc. have doubled and tripled, so has silver in the same time (I don’t compare gold). The prices vary a little based on what you price and exactly when, but essentially the value of PM’s relative to other goods remains fairly constant, it’s the value of the dollar that is dropping.
You keep your physical PMs until THE DAY that you intend to buy something, go to an exchange, get the wheelbarrow full of paper dollars that your dime is worth, and go buy bread.
(WSJ article, no posting allowed.)
Yuppers.
And I just bought on the dip in silver.
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