Buy Gold on the Fed Fiddling

Stocks are down and gold is lower on the latest Federal Reserve FOMC Meeting Minutes. The skinny is that the Fed sounded less dovish, and might be less accommodative in the future. It’s counter intuitive, because the Fed would only be less giving if the economy were solidifying. Nevertheless, stocks are lower because there could be less support from the Fed, and the market is not sure the notoriously faulty forecasters are on target. Gold is dropping, because of two reasons. If the Fed is less free with dollars, then the currency should strengthen; and if the economy is improving, than riskier assets should do better. Here’s why I suggest ignoring the Fed fiddling, and buying gold on the dip.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relative tickers include: NYSE: GG, NYSE: AEM, AMEX: ANV, NYSE: AU, NYSE: AUQ, AMEX: AZK, NYSE: ABX, AMEX: BRD, Nasdaq: CTHR, AMEX: CGR, OTC: CGCO.PK, NYSE: BVN, Nasdaq: DROOY, NYSE: EGO, AMEX: EGI, AMEX: XRA, NYSE: GFI, AMEX: GRZ, Nasdaq: GORO, OTC: MYNG.PK, AMEX: GSS, AMEX: GBG, NYSE: HMY, NYSE: IAG, AMEX: THM, NYSE: JAG, AMEX: KGN, AMEX: KBX, Nasdaq: KGJI, NYSE: KGC, AMEX: MDW, AMEX: MGH, AMEX: NSU, OTC: NJMC.PK, NYSE: NEM, OTC: NBRI.OB, AMEX: NXG, AMEX: NG, AMEX: RIC, Nasdaq: RGLD, AMEX: RBY, AMEX: SA, AMEX: XPL, AMEX: TRE, OTC: THMG.OB, NYSE: UXG, AMEX: VGZ, OTC: WITM.PK, NYSE: AUY, NYSE: CDE, NYSE: EXK, NYSE: HL, AMEX: MVG, AMEX: MGN, Nasdaq: SSRI, NYSE: SLW, NYSEArca: GLD, NYSEArca: GDX, NYSEArca: SLV, NYSEArca: AGQ, NYSEArca: ZSL, AMEX: GPL, NYSE: SVM, AMEX: PZG, Nasdaq: PAAS, NYSE: AG.

Buy Gold

The Federal Reserve’s Federal Open Market Committee (FOMC) published its meeting minutes for its March 13 meeting Tuesday afternoon. You can go ahead and read it, but all you need to know is that stocks are lower because of it. The focus of this article, though, is on gold not stocks.

As suggested in the introduction here, if the Federal Reserve parks its dollar-copter, the next step would be to look toward containing inflation. For this reason, the dollar is soaring +0.7% against the euro Wednesday through late afternoon trading hours Eastern Time. The PowerShares DB US Dollar Index Bullish ETF (NYSE: UUP) is up 0.5% deep into the afternoon. Much of the foolhardy popular press is blaming the dollar move on a soft Spanish bond offering… silly short-hands…

For the same reason outlined, gold is on the deep decline. Gold futures are off roughly 3.3%; the SPDR Gold Shares ETF (NYSE: GLD) is off 1.9%; and gold miners Goldcorp (NYSE: GG), Newmont Mining (NYSE: NEM) and Barrick Gold (NYSE: ABX) are off between 5% and 6%. Gold should be on the rise if the global community is once again terrified about a European disintegration via Spanish debt softness and soft data. That would be the give-away for reporters with a clue… Luckily you still have The Greek to fill in the void.

Here’s Why I Would Use this as an Opportunity to Buy Gold:

1. The geopolitical powder keg remains tightly snug between U.S. warships and the Iranian coastline. Nothing has changed with regard to the Iranian nightmare. Iran has not budged in a significant way, and the West’s sanctions are increasingly suffocating it.


2. Recession seems to be overcoming Europe, where 20% of American exports are sold into. Wednesday, a Purchasing Managers Index for Europe was reported below 50, indicating the region is likely in recession. Also, regional retail sales fell 0.1% in volume and 2.1% year-to-year. The regional economy shrank 0.3% in Q4 2011, and seems set to mark another quarter of contraction, which would qualify it for recession. Compounding on this, unemployment for the euro zone reached a record high in February.


3. The European financial crisis has not yet subsided. Wednesday, soft demand for Spanish debt sent the markets into a spin. In a recent interview, Standard & Poor’s Sovereign Ratings Head, Moritz Kraemer said he believes Greece will probably have to restructure its debt again, involving needed aid from its European partners. Obviously, European heads are on record saying the latest bailout would be the last for Greece; now they may be put to the test at a time when their word will be measured. Moritz noted the risk posed by upcoming elections across Europe and Greece.


4. The American economy has been showing signs of strain, with recent manufacturing data, housing reports and consumer information indicating softness.

Thus, all the reasons gold has climbed over the last few years continue to exist, if they are not intensified. So while foolhardy capital may flow out of gold and gold relative investments Wednesday on a few words from the Fed, I suggest investors look to the weakness as an opportunity to add to positions.

Article should interest investors in precious metals stocks: Goldcorp (NYSE: GG), Agnico-Eagle Mines (NYSE: AEM), Allied Nevada Gold (AMEX: ANV), AngloGold Ashanti (NYSE: AU), AuRico Gold (NYSE: AUQ), Aurizon Mines (AMEX: AZK), Barrick Gold (NYSE: ABX), Brigus Gold (AMEX: BRD), Charles & Covard (Nasdaq: CTHR), Claude Resources (AMEX: CGR), Commerce Group (OTC: CGCO.PK), Compania Mina Buenaventura S.A. (NYSE: BVN), DRDGOLD (Nasdaq: DROOY), Eldorado Gold (NYSE: EGO), Entrée Gold (AMEX: EGI), Exeter Resource (AMEX: XRA), Gold Fields (NYSE: GFI), Gold Reserve (AMEX: GRZ), Gold Resource (Nasdaq: GORO), Golden Eagle Int’l (OTC: MYNG.PK), Golden Star Resources (AMEX: GSS), Great Basin Gold (AMEX: GBG), Harmony Gold (NYSE: HMY), IAMGOLD (NYSE: IAG), International Tower Hill Mines (AMEX: THM), Jaguar Mining (NYSE: JAG), Keegan Resources (AMEX: KGN), Kimber Resources (AMEX: KBX), Kingold Jewelry (Nasdaq: KGJI), Kinross Gold (NYSE: KGC), Midway Gold (AMEX: MDW), Minco Gold (AMEX: MGH), Nevsun Resources (AMEX: NSU), New Jersey Mining (OTC: NJMC.PK), Newmont Mining (NYSE: NEM), North Bay Resources (OTC: NBRI.OB), Northgate Minerals (AMEX: NXG), NovaGold Resources (AMEX: NG), Richmont Mines (AMEX: RIC), Royal Gold (Nasdaq: RGLD), Rubicon Minerals (AMEX: RBY), Seabridge Gold (AMEX: SA), Solitario Exploration and Royalty (AMEX: XPL), Tanzanian Royalty Exploration (AMEX: TRE), Thunder Mountain Gold (OTC: THMG.OB), U.S. Gold (NYSE: UXG), Vista Gold (AMEX: VGZ), Wits Basin Precious Metals (OTC: WITM.PK), Yamana Gold (NYSE: AUY), Coeur d’Alene Mines (NYSE: CDE), Endeavour Silver (NYSE: EXK), Hecla Mining (NYSE: HL), Mag Silver (AMEX: MVG), Mines Management (AMEX: MGN), Silver Standard Resources (Nasdaq: SSRI), Silver Wheaton (NYSE: SLW), SPDR Gold Trust (NYSEArca: GLD), Market Vectors Gold Miners ETF (NYSEArca: GDX), iShares Silver Trust (NYSEArca: SLV), ProShares Ultra Silver (NYSEArca: AGQ), ProShares Ultra Short Silver (NYSEArca: ZSL), Great Panther Silver (AMEX: GPL), Silvercorp Metals (NYSE: SVM), Paramount Gold and Silver (AMEX: PZG), Pan American Silver (Nasdaq: PAAS) and First Majestic Silver (NYSE: AG).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Gold Price Factors

At a time when you would expect gold prices to climb even higher, the shiny metal I call mankind’s inherent currency has dropped along with other asset classes. I’m sure you’ve wondered why, and I believe I’ve got some understanding of the complex forces that are driving gold prices today. These forces have helped to stabilize gold and even quelled the heat around the commodity recently. These latest weeks’ trading have helped us to understand the dynamics of the commodity all the better. Thus, I suspect I can add value to your forecasting.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Gold Price Factors

Gold prices dropped again to start this week, despite a swirling storm about the euro and new concerns about a possible U.S. government budget failure. You would expect gold prices to rise in such a scenario, but the metal was instead down roughly $30 Monday. The spot price of gold was flirting with sub-$1600 per ounce in fact, certainly surprising given the last several weeks of chaos. So what’s up?

Some might point to a previously overextended commodity price now seeking mean valuation, or reverting to its mean. This is certainly the most important factor in forecasting gold price movement, since the market only seeks to estimate true value. To understand how a mean reversion could be underway, we must review recent history briefly.

Gold topped out at about $1890 on the spot price (closing pricing), spurred by a frenzied drive to acquire the metal as the US appeared set to record a technical default on its debt this past summer. A quick study of the one-year chart for spot gold clearly illustrates an insecure price level near $1900, established by the spike in the commodity. Once the US Congress mitigated technical default risk, and while the United States even bore a downgrade of its sovereign credit rating by Standard & Poor’s (NYSE: MHP), investors looked around and saw all was not lost. Suddenly the gold price felt expensive, and so this medium term driver is certainly playing a major role in gold price action today. However, a look at the chart seems to show gold at about a medium term trend line, and a $1500 price would seem a secure floor despite its breaking of that line.

Something else is playing a short-term role in driving gold today though. Popular media, based on analyst interviews, regularly reports that there is a force against gold which is capital driven. This force is the theoretical use of gold-relative profits or positions to cover other positions as asset classes dive. It may likewise be that an unbalanced holding of gold in many portfolios is being balanced with capital seeking value in other segments. But, the drops seen in other investment securities pricing does not support this second idea as a main factor in markets.

Another important factor working against gold and all commodities is dollar strength. This has certainly been a stabilizing control on gold pricing. As the euro has found fewer friends while rumors swirl about an imminent Greek default, the dollar has benefited. As commodities are priced in dollars, the strength of the currency has made commodities cheaper in dollar terms. The funny thing is that as the global economy comes under stress, dollar strength has persevered, and this has certainly acted as a counterintuitive and counteracting force on gold pricing.

Over the longer term though, if the United States continues to find intensifying economic and investment pressures, the dollar could be eventually undermined, at which time gold would be free to fly to greater heights. This untethered scenario is the kind that supports gold pricing above $2000 and perhaps as high as $5000 per ounce. Without it though, I cannot find supporting reasoning to forecast new records for the price of gold.

This article should interest investors in precious metals stocks: Goldcorp (NYSE: GG), Agnico-Eagle Mines (NYSE: AEM), Allied Nevada Gold (AMEX: ANV), AngloGold Ashanti (NYSE: AU), AuRico Gold (NYSE: AUQ), Aurizon Mines (AMEX: AZK), Barrick Gold (NYSE: ABX), Brigus Gold (AMEX: BRD), Charles & Covard (Nasdaq: CTHR), Claude Resources (AMEX: CGR), Commerce Group (OTC: CGCO.PK), Compania Mina Buenaventura S.A. (NYSE: BVN), DRDGOLD (Nasdaq: DROOY), Eldorado Gold (NYSE: EGO), Entrée Gold (AMEX: EGI), Exeter Resource (AMEX: XRA), Gold Fields (NYSE: GFI), Gold Reserve (AMEX: GRZ), Gold Resource (Nasdaq: GORO), Golden Eagle Int’l (OTC: MYNG.PK), Golden Star Resources (AMEX: GSS), Great Basin Gold (AMEX: GBG), Harmony Gold (NYSE: HMY), IAMGOLD (NYSE: IAG), International Tower Hill Mines (AMEX: THM), Jaguar Mining (NYSE: JAG), Keegan Resources (AMEX: KGN), Kimber Resources (AMEX: KBX), Kingold Jewelry (Nasdaq: KGJI), Kinross Gold (NYSE: KGC), Midway Gold (AMEX: MDW), Minco Gold (AMEX: MGH), Nevsun Resources (AMEX: NSU), New Jersey Mining (OTC: NJMC.PK), Newmont Mining (NYSE: NEM), North Bay Resources (OTC: NBRI.OB), Northgate Minerals (AMEX: NXG), NovaGold Resources (AMEX: NG), Richmont Mines (AMEX: RIC), Royal Gold (Nasdaq: RGLD), Rubicon Minerals (AMEX: RBY), Seabridge Gold (AMEX: SA), Solitario Exploration and Royalty (AMEX: XPL), Tanzanian Royalty Exploration (AMEX: TRE), Thunder Mountain Gold (OTC: THMG.OB), U.S. Gold (NYSE: UXG), Vista Gold (AMEX: VGZ), Wits Basin Precious Metals (OTC: WITM.PK), Yamana Gold (NYSE: AUY), Coeur d’Alene Mines (NYSE: CDE), Endeavour Silver (NYSE: EXK), Hecla Mining (NYSE: HL), Mag Silver (AMEX: MVG), Mines Management (AMEX: MGN), Silver Standard Resources (Nasdaq: SSRI), Silver Wheaton (NYSE: SLW), SPDR Gold Trust (NYSEArca: GLD), Market Vectors Gold Miners ETF (NYSEArca: GDX), iShares Silver Trust (NYSEArca: SLV), ProShares Ultra Silver (NYSEArca: AGQ), ProShares Ultra Short Silver (NYSEArca: ZSL), Great Panther Silver (AMEX: GPL), Silvercorp Metals (NYSE: SVM), Paramount Gold and Silver (AMEX: PZG), Pan American Silver (Nasdaq: PAAS) and First Majestic Silver (NYSE: AG).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Gold in Bubble Mania Mode

It seems it was only just yesterday that I could buy a can of coke for two bits and an ounce of gold for $250. Can you imagine that? A sign of the times, gold quickly dusted more than that much value off on its way to a greater than 30% rise to date in 2011. After boldly taking 6.4% last week alone (14% this month through Friday), I think it’s safe to say that gold is officially in bubble mania mode, but I also believe it has the thrust to surpass $2000 an ounce at least before an eventual horrific gold bubble burst at some future date.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relative tickers include: NYSE: GG, NYSE: AEM, AMEX: ANV, NYSE: AU, NYSE: AUQ, AMEX: AZK, NYSE: ABX, AMEX: BRD, Nasdaq: CTHR, AMEX: CGR, OTC: CGCO.PK, NYSE: BVN, Nasdaq: DROOY, NYSE: EGO, AMEX: EGI, AMEX: XRA, NYSE: GFI, AMEX: GRZ, Nasdaq: GORO, OTC: MYNG.PK, AMEX: GSS, AMEX: GBG, NYSE: HMY, NYSE: IAG, AMEX: THM, NYSE: JAG, AMEX: KGN, AMEX: KBX, Nasdaq: KGJI, NYSE: KGC, AMEX: MDW, AMEX: MGH, AMEX: NSU, OTC: NJMC.PK, NYSE: NEM, OTC: NBRI.OB, AMEX: NXG, AMEX: NG, AMEX: RIC, Nasdaq: RGLD, AMEX: RBY, AMEX: SA, AMEX: XPL, AMEX: TRE, OTC: THMG.OB, NYSE: UXG, AMEX: VGZ, OTC: WITM.PK, NYSE: AUY, NYSE: CDE, NYSE: EXK, NYSE: HL, AMEX: MVG, AMEX: MGN, Nasdaq: SSRI, NYSE: SLW, NYSEArca: GLD, NYSEArca: GDX, NYSEArca: SLV, NYSEArca: AGQ, NYSEArca: ZSL, AMEX: GPL, NYSE: SVM, AMEX: PZG, Nasdaq: PAAS, NYSE: AG.

Gold in Bubble Mania Mode

The rush to gold is not lucky happenstance, but the result of simple relative analysis. Man has naturally tended toward the usage of gold as currency. In years past, economic crises of all sorts have driven short spurts in gold demand and resulting price rise, but never to as high a point or for as long a span of time as now. Gold and a handful of other securities and assets have historically attracted capital in the so-called "flight to safety" trade. In times past, and in part today as well, the yen, dollar and U.S. treasuries have also attracted capital in desperate times.

What’s different today versus in years past is that there are mounting concerns about the developed world’s most important currencies, the dollar, yen, euro and pound. In fact, all fiat currency is in question within a scenario where the world’s most important consumption economies seem to face uniquely deep and difficult downturns. It is a situation where currencies have been diluted by unsustainable public debt loads, and the solvency of sovereign states never before questioned are now debatable. Once supremely confident G-8 leaders, are finding warnings (and worse) whaling down on them from the rating agencies like a storm of hellfire.

In a world where Japan’s footing seems unstable, within which the shadow of a new dark ages covers Europe, and the latest greatest empire, the United States, seems about to fall, the choices for safekeeping wealth are few. Markets are so befuddled about what to do, that the downgrade of American credit by Standard & Poor’s (NYSE: MHP) was followed by a rush into U.S. treasury securities on the global turmoil that developed. Demand for the doomed assets, should Moody’s (NYSE: MCO) follow S&P’s lead, has been so great that this week’s auction could allow the United States to borrow at a zero or negative interest rate. In other words, people don’t know where their money can be safely kept, and so are near willing to pay for its safekeeping.

Relative analysis of the “flight to safety” pool of investment options has investors seeing just a few, with the first being gold. In times of trouble, we return to what we trust in. As the gold bubble expands and concern about its bursting intensifies, though, I believe we’ll see more and more money flowing into alternatives like silver and the Swiss Franc, and then gold will lose some of its luster.

At the same time, what drives all bubbles is pumping this one up as well, greed, and greed is a powerful force. In Asia, and across the globe, people are seeing one asset, which is within their reach or around their neck, rising in value while everything else is threatened. This has everyone with the opportunity, from the Mainland Chinaman to the pompous president of Venezuela, trying to get their hands on more gold. There is, after all, only two Olympic sized swimming pools worth of gold currently available on open market. For this reason, I don’t see the bubble bursting just yet, but I would look for the silver bubble to start moving toward $50 alongside gold’s targeting of $2000. Look for more of our work on precious metals at our blog, Wall Street Greek.

Article should interest investors in precious metals stocks: Goldcorp (NYSE: GG), Agnico-Eagle Mines (NYSE: AEM), Allied Nevada Gold (AMEX: ANV), AngloGold Ashanti (NYSE: AU), AuRico Gold (NYSE: AUQ), Aurizon Mines (AMEX: AZK), Barrick Gold (NYSE: ABX), Brigus Gold (AMEX: BRD), Charles & Covard (Nasdaq: CTHR), Claude Resources (AMEX: CGR), Commerce Group (OTC: CGCO.PK), Compania Mina Buenaventura S.A. (NYSE: BVN), DRDGOLD (Nasdaq: DROOY), Eldorado Gold (NYSE: EGO), Entrée Gold (AMEX: EGI), Exeter Resource (AMEX: XRA), Gold Fields (NYSE: GFI), Gold Reserve (AMEX: GRZ), Gold Resource (Nasdaq: GORO), Golden Eagle Int’l (OTC: MYNG.PK), Golden Star Resources (AMEX: GSS), Great Basin Gold (AMEX: GBG), Harmony Gold (NYSE: HMY), IAMGOLD (NYSE: IAG), International Tower Hill Mines (AMEX: THM), Jaguar Mining (NYSE: JAG), Keegan Resources (AMEX: KGN), Kimber Resources (AMEX: KBX), Kingold Jewelry (Nasdaq: KGJI), Kinross Gold (NYSE: KGC), Midway Gold (AMEX: MDW), Minco Gold (AMEX: MGH), Nevsun Resources (AMEX: NSU), New Jersey Mining (OTC: NJMC.PK), Newmont Mining (NYSE: NEM), North Bay Resources (OTC: NBRI.OB), Northgate Minerals (AMEX: NXG), NovaGold Resources (AMEX: NG), Richmont Mines (AMEX: RIC), Royal Gold (Nasdaq: RGLD), Rubicon Minerals (AMEX: RBY), Seabridge Gold (AMEX: SA), Solitario Exploration and Royalty (AMEX: XPL), Tanzanian Royalty Exploration (AMEX: TRE), Thunder Mountain Gold (OTC: THMG.OB), U.S. Gold (NYSE: UXG), Vista Gold (AMEX: VGZ), Wits Basin Precious Metals (OTC: WITM.PK), Yamana Gold (NYSE: AUY), Coeur d’Alene Mines (NYSE: CDE), Endeavour Silver (NYSE: EXK), Hecla Mining (NYSE: HL), Mag Silver (AMEX: MVG), Mines Management (AMEX: MGN), Silver Standard Resources (Nasdaq: SSRI), Silver Wheaton (NYSE: SLW), SPDR Gold Trust (NYSEArca: GLD), Market Vectors Gold Miners ETF (NYSEArca: GDX), iShares Silver Trust (NYSEArca: SLV), ProShares Ultra Silver (NYSEArca: AGQ), ProShares Ultra Short Silver (NYSEArca: ZSL), Great Panther Silver (AMEX: GPL), Silvercorp Metals (NYSE: SVM), Paramount Gold and Silver (AMEX: PZG), Pan American Silver (Nasdaq: PAAS) and First Majestic Silver (NYSE: AG).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.

Gold Should Top $1600 Today but Weaken Friday

I am looking for gold to surmount $1600 Thursday, partly on Moody's (NYSE: MCO) ratings warning for the U.S., but I would sell out of my holdings before the close, as I expect the European bank stress tests to support the euro, and I anticipate American Congressmen will move more quickly now toward raising the debt ceiling.

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

Relative tickers include: NYSE: GG, NYSE: AEM, AMEX: ANV, NYSE: AU, NYSE: AUQ, AMEX: AZK, NYSE: ABX, AMEX: BRD, Nasdaq: CTHR, AMEX: CGR, OTC: CGCO.PK, NYSE: BVN, Nasdaq: DROOY, NYSE: EGO, AMEX: EGI, AMEX: XRA, NYSE: GFI, AMEX: GRZ, Nasdaq: GORO, OTC: MYNG.PK, AMEX: GSS, AMEX: GBG, NYSE: HMY, NYSE: IAG, AMEX: THM, NYSE: JAG, AMEX: KGN, AMEX: KBX, Nasdaq: KGJI, NYSE: KGC, AMEX: MDW, AMEX: MGH, AMEX: NSU, OTC: NJMC.PK, NYSE: NEM, OTC: NBRI.OB, AMEX: NXG, AMEX: NG, AMEX: RIC, Nasdaq: RGLD, AMEX: RBY, AMEX: SA, AMEX: XPL, AMEX: TRE, OTC: THMG.OB, NYSE: UXG, AMEX: VGZ, OTC: WITM.PK, NYSE: AUY, NYSE: CDE, NYSE: EXK, NYSE: HL, AMEX: MVG, AMEX: MGN, Nasdaq: SSRI, NYSE: SLW, NYSEArca: GLD, NYSEArca: GDX, NYSEArca: SLV, NYSEArca: AGQ, NYSEArca: ZSL, AMEX: GPL, NYSE: SVM, AMEX: PZG, Nasdaq: PAAS, NYSE: AG.

Gold Should Top $1600 Today but Weaken Friday

Wednesday’s move in gold was nothing new, so discount those theorists trying to tie the day’s advance to Federal Reserve Chairman Bernanke’s comments. Yes, the Fed Chief said more quantitative easing or other “untested measures” were possible for a still testy economy, but I would hope you all already knew that. This latest surge in the glittery metal I don’t own enough of is marking close to a 10% two-week gain. So Wednesday’s 1.2% rise to about $1582.20 is but a step in a staircase built on the crumbled architecture of medieval Europe and perhaps a few Blarney Stones.

Gold was not up on the dollar alone, but climbed over the euro too. This is about the demise of fiat currency, watered down by nation states seeking to save sovereign sinners Portugal, Ireland, Italy, Greece and Spain (the PIIGS). This is about the United States’ government growing its debt and deficit to record highs and then threatening default. This is about geopolitical chaos running through the oil rich Middle East and North Africa. This may be about the end of times... or at least the good times.

The gold standard seems to suit Standard & Poor’s (NYSE: MHP) and Moody’s (NYSE: MCO) just fine, with Tuesday’s downgrade of Ireland’s sovereign rating to junk, a move that followed the recent cutting of Portugal. It’s like the rating agencies find a new neck to slit each evening. Wednesday night Moody’s even dared to put the United States on ratings watch, warning that it is becoming more likely that the U.S. could suffer a short-term default on its debt payments.

But, in fact, all that glitters is not just gold. Silver was up near 7% Wednesday as well. Whatever hard asset we price in fiat currency is going to be worth more as those currencies disintegrate. Perhaps the biblical prophecy of loaves of bread going for a year’s salary is not so far off. In parts of Africa it’s already true, and the price of sugar helped to fuel the riots in Tunisia that toppled the government.

So I suppose you’re wondering what The Greek suggests to do in the near-term with regard to gold. I think you’ll be surprised with the answer. While I’m not sure what the Bilderbergers want over the long-term, and while I think traders would like to ride gold over $1600, I also believe Friday’s stress test results from Europe will be mostly good, if not adequate enough to support the euro. I think Wednesday evening’s warning from Moody’s, the shot across the bow, should be enough to cause a good number of Congressmen to crap their pants and raise the debt ceiling. In other words, I’m looking for gold to backtrack before too long, so even though I can feel the end of good times coming, I still say take your profits in gold before Friday, yet perhaps after we hurdle $1600 Thursday.



Article should interest investors in precious metals stocks: Goldcorp (NYSE: GG), Agnico-Eagle Mines (NYSE: AEM), Allied Nevada Gold (AMEX: ANV), AngloGold Ashanti (NYSE: AU), AuRico Gold (NYSE: AUQ), Aurizon Mines (AMEX: AZK), Barrick Gold (NYSE: ABX), Brigus Gold (AMEX: BRD), Charles & Covard (Nasdaq: CTHR), Claude Resources (AMEX: CGR), Commerce Group (OTC: CGCO.PK), Compania Mina Buenaventura S.A. (NYSE: BVN), DRDGOLD (Nasdaq: DROOY), Eldorado Gold (NYSE: EGO), Entrée Gold (AMEX: EGI), Exeter Resource (AMEX: XRA), Gold Fields (NYSE: GFI), Gold Reserve (AMEX: GRZ), Gold Resource (Nasdaq: GORO), Golden Eagle Int’l (OTC: MYNG.PK), Golden Star Resources (AMEX: GSS), Great Basin Gold (AMEX: GBG), Harmony Gold (NYSE: HMY), IAMGOLD (NYSE: IAG), International Tower Hill Mines (AMEX: THM), Jaguar Mining (NYSE: JAG), Keegan Resources (AMEX: KGN), Kimber Resources (AMEX: KBX), Kingold Jewelry (Nasdaq: KGJI), Kinross Gold (NYSE: KGC), Midway Gold (AMEX: MDW), Minco Gold (AMEX: MGH), Nevsun Resources (AMEX: NSU), New Jersey Mining (OTC: NJMC.PK), Newmont Mining (NYSE: NEM), North Bay Resources (OTC: NBRI.OB), Northgate Minerals (AMEX: NXG), NovaGold Resources (AMEX: NG), Richmont Mines (AMEX: RIC), Royal Gold (Nasdaq: RGLD), Rubicon Minerals (AMEX: RBY), Seabridge Gold (AMEX: SA), Solitario Exploration and Royalty (AMEX: XPL), Tanzanian Royalty Exploration (AMEX: TRE), Thunder Mountain Gold (OTC: THMG.OB), U.S. Gold (NYSE: UXG), Vista Gold (AMEX: VGZ), Wits Basin Precious Metals (OTC: WITM.PK), Yamana Gold (NYSE: AUY), Coeur d’Alene Mines (NYSE: CDE), Endeavour Silver (NYSE: EXK), Hecla Mining (NYSE: HL), Mag Silver (AMEX: MVG), Mines Management (AMEX: MGN), Silver Standard Resources (Nasdaq: SSRI), Silver Wheaton (NYSE: SLW), SPDR Gold Trust (NYSEArca: GLD), Market Vectors Gold Miners ETF (NYSEArca: GDX), iShares Silver Trust (NYSEArca: SLV), ProShares Ultra Silver (NYSEArca: AGQ), ProShares Ultra Short Silver (NYSEArca: ZSL), Great Panther Silver (AMEX: GPL), Silvercorp Metals (NYSE: SVM), Paramount Gold and Silver (AMEX: PZG), Pan American Silver (Nasdaq: PAAS) and First Majestic Silver (NYSE: AG).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.