Gold Rush Worldwide!

• More people are rushing to gold since last year and there seems to be no let up. Gold is nobody’s liability. Unlike fiat/paper currency, gold has always withstood the sands of time. For thousands of years throughout many empires, gold has been currency. Paper money comes and goes. But gold is the standard that no fiat currency can match. Look at the chart of purchasing power of USD, courtesy of www.dollardaze.org :
    
    
  
• See where the USD is headed ? This is typical of fiat currencies: eventually they all become toilet paper. Take a look at what the US government and Federal Reserve is doing to the money supply.
      (from St. Louis Fed : research.stlouisefed.org)
    
• Inflation is a tax on savings. Although, we are currently in a deflationary environment, it is a matter of time before inflation kicks in. Quantity Easing is simply printing money out of thin air. It is inflationary. Quotes :
   
  “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.” - John Maynard Keynes
   
  “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. … This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.” - Alan Greenspan 
   
• It should not surprise anyone that investors are flocking to gold. These are dire circumstances in dire times. The Daily Telegraph reports in Gold rush erupts over financial crisis : 
    
  THE global financial crisis has sparked a new gold rush. Worried investors seeking a safe home for their money are ploughing billions of dollars into the precious metal in a bid to preserve their wealth.
   
  Demand has now reached such unprecedented levels that the Perth Mint, Australia’s biggest wholesaler of gold coins and bars, has been forced to ration its sales. Perth Mint’s bullion sales rose 194 per cent in the December quarter compared with the corresponding period in 2007, while silver bullion sales were up 140 per cent.
    
  The mint has suspended sales of all gold bars and all bullion coins – except its 1oz “Kangaroo” gold bullion coin. On Monday, after a three-month suspension, it will expand its range of bullion coins for sale but the restrictions remain in place for minted gold bullion bars so the mint can sell some gold to as many customers as possible.
   
  “We are working three shifts a day, six days a week, and still can’t keep up with demand,” Perth Mint CEO Ed Harbuz said. “I’ve never known anything like this in the precious metals market.
   
  “We would be working Sundays too but we are having difficulty getting enough staff.”  ……. 
   
  One customer recently bought $500,000 worth of bullion and wanted it delivered so he could hold it personally. …… “Orders of $10 million or more are not unusual. Often the orders are much larger if we are dealing with pension funds or institutional investors.”
    
• In another report, Merrill Lynch says rich turning to gold bars for safety :
    
  Gary Dugan, the chief investment officer for the US bank, said there has been a remarkable change in sentiment. “People are genuinely worried about what the world is going to look like in 2009. It is amazing how many clients want physical gold, not ETFs,” he said, referring to exchange trade funds listed in London, New York, and other bourses.
   
  “They are so worried they want a portable asset in their house. I never thought I would be getting calls from clients saying they want a box of krugerrands,” he said.
     ……..
  The metal should do well whatever happens. If deflation sets in and rocks the economic system it will serve as a safe-haven, but if massive monetary stimulus gains traction and sets off inflation once again it will also come into its own as a store of value. “It’s win-win either way,” said Mr Dugan. 
   
• Gold price is definitely headed higher. Conservative figures are US$1500 – US$ 2500 per ounce . Those who think there will be a global monetary meltdown, a devaluation of fiat currency against gold, are quoting stratospheric figures between US$10,000 – US$ 40,000 per ounce.
   
• I personally will not bet against a price of US$ 5000 per ounce. See also :
   
  Great Gold Rush of 21st Century
  Economic Depression and Gold
  Massive US Dollar Devaluation Against Gold During 2009
  Global Monetary Meltdown in 2009 ?
  What’s not to Like about Gold ?
  Obama, Roosevelt, Gold Confiscation and Dollar Devaluation

Disclaimer – I am not a financial advisor. This is not an advice to buy, sell or hold any stocks or bonds or any precious metals.

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