Hoard Gold or Food? Inflation concerns remain.
While gold has had a fantastic run in price appreciation over the last 10 years and even more importantly the last 2 or 3 –
we may be over looking commodities that are experiencing even faster growth.
Elizabeth Campbell published an article today at Bloomberg.com titled:
New Norm High Food Costs Boost Supply Risk as World Hunger Grows
Food as a “whole” is now at all time high levels of price, relative to the spending power of consumers. Ms. Campbell writes:
“Even after the World Bank’s food-price index slipped from a record in July, the measure was still 7 percent higher in October than a year earlier, the Washington-based lender said today in a report. While costs have dropped in recent months, fats and oils still are 12 percent more expensive than a year earlier, and grains are “very close” to the all-time high reached in 2008, the bank said.”
For those that have consistently added gold and silver bullion to their investments over the last few years, there is often much cajoling by their friends and family who say things like, “Well that’s great you’ve got all that gold – but when disaster hits you sure can’t eat it!”
Most bullion investors / hoarders will point out that you can’t eat paper money or coins either, but that doesn’t stop people from “saving for a rainy day”. What gold bugs will tell you is that the precious metal is more likely to hold it’s value and even increase relative to paper currency as inflation continues it’s rise.
As we see the price of basic necessities such as food and water continue to become more scarce and prices continue to rise – it will be those hard assets such as gold, silver, real estate and oil that will continue to hold and increase in value. And only those with income sources other than traditional 9 to 5 employment, such as rental property, dividend paying stocks and royalties will continue to thrive.
Knowing that even today, many people on the planet go without enough to eat on a daily basis, it’s fairly obvious that this problem is only getting worse not better.
We have arrived…
Newt Gingrich is running for President, MF Global some how “mis-placed” $1 Billion U.S. Dollars, economists are calling for another recession and gold drops over $80/ounce, it’s third fall in three days. Gold has now hit the $1500 range.
With the Fed now conceding that the economy has remained weaker than anticipated and hinting that QE3 may just be weeks away (let’s get through this whole holiday thing first!) – the dollar will continue to collapse and that can mean only one thing. Continued rising inflation is on the way.
Zimbabwe Calling…
With the Fed in control it’s not likely we’ll see anything close to the hyperinflation of Zimbabwe – but when the inflation needles starts to rise you better be holding some hard assets if you hope to survive – we’re talking real estate and gold. Real estate has it’s place, obviously you can live on your gold, but it’s expensive and not very liquid.
Buying Gold Eagles
I’m getting ready to add a few U.S. Gold Eagle 1 oz. coins to my holdings. As of 
this writing, with Gold is trading at $1583/ounce, Kitco is quoting $1670.59 and Blanchard is quoting $1649.61. I’ll be watching the quotes closely to see if I can pickup a few Gold Eagles for under $1600/ounce.
What are you buying?
Are you buying or selling? Holding what you’ve already got? I’d love to hear your thoughts and ideas about gold!
Gold Drops Again – Approaches $1600 Mark
Just when it looked like gold was going to breakout past $1800/ounce, it turns around dropping over $70/ounce in 2 days to settle at $1634/ounce.
Volatility is the name of the game right now both in stocks and gold worldwide. One day the news is good, the next, not so good.
Adding to Positions
I’m looking to add some more gold to my current holdings but like Jim Rogers, I’m waiting for a significant pull-back before placing the trade. Inflationary pressures continue to increase day by day, which would indicate gold is already at a near-term low. While I do believe a long term uptrend in gold will continue, I’m willing to miss out on buying now, for the chance to buy lower in the future.
I’m looking to buy somewhere in the $1500-$1600/ounce range and I think a lot of others are too. There is likely enough interest at $1500/ounce – which is about 25% off of gold’s recent highs in the low $1900’s, that any pull-back to that price range would likely be short lived before the price is bid back up again.
Gold moves quick, so if you are looking to buy – pick your price point and get your cash ready. Just as gold only stayed briefly at the $1750+ level, it won’t stay long at $1500 should it get there.
The only question that remains unanswered is what kind of gold to buy? I’ll discuss some gold options in a future post – however, I will be staying away from any ETF (exchange traded fund) or any other “paper” version of gold. For me, only the real metal in my hand will do!
If I wanted worthless “paper” gold I’d just hold on to my cash!
With gold well above the $1500/ounce mark, the new gold rush is on, especially in places like Alaska.
With so much untouched land, any gold bug with a desire to “Strike it Rich!” has thought about how they can claim some of that Klondike gold for themselves.
However, for most people one of three things will probably stop them from even trying to find gold in Alaska:
- Time – Most folks work a 9 to 5 job and just don’t have the time to contemplate such an undertaking
- Expertise – Do you know how run a bulldozer or backhoe? I know I don’t – so for me I’m sticking to panning the local riverbeds.
- Money – Ah, yes money – the great equalizer. Even if you have the time and the experience, so you have the $100,000 or more it would take to acquire the heavy equipment, dredges, pumps and generators not to mention
the fuel to run all of it?
The TV Fantasy
It’s a real eye opener to watch TV shows like Gold Rush Alaska on the Discovery Channel. These guys have bet hundreds of thousands of dollars of their family’s net-worth, taking a chance to strike it rich.
Alaska is a harsh place – with the cold temperatures and rugged terrain the biggest problem is often just getting to where the gold might actually be – let alone finding it and pulling it out of the ground. But the allure remains and as long as there is gold in the ground someone will try to find it!
Since not everyone has the time, experience or money to set out on their own gold expedition – it’s not surprising that you can find plenty of opportunity to trade your cash for the chance to share the wealth in gold claims owned by those claim to be more capable.
The Cash Investment
Take for instance the Alaska Gold Venture LLC – I found them online with a quick google search. They are looking to fund their mining operation on the claims they already control in the Klondike. For a mere $10,000 you can buy one of 25 shares currently available in their Limited Liability Company. The folks behind this LLC, claim that you may receive up to a 300% return in this high-risk investment. You may also lose all of your investment – all 100% of it.
For me, the risk:reward is too high on an opportunity like this. The estimated time for this investment to reach completion could be 3 years or more for a 300% return. Compare that with owning physical gold which in the last 10 years has gone from about $300/ounce to close to $2000/ounce – that’s up to a 600% return and with little or no chance that gold will ever go to $zero!
It’s fun to watch and even share in the victories of those who take the risks of striking it rich with gold – but remember that even in the California Gold Rush of 1849, it was Sam Brannan who became the richest man in California selling pans, picks and shovels!
CNBC Bold Call for 2012 – Gold Goes COLD
With the end of the world coming in 2012 – CNBC just published their “Bold Calls for 2012” wherein Larry Kudlow makes his bold call that, “Gold Goes Cold” and that gold won’t top $2000/oz.
I’m not sure how *BOLD* of a call this really is as Kudlow doesn’t call for any sort of bottom price point, nor does he give any sort of time frame for Gold turning stale – other than it’s a 2012 prediction.
Maybe that means gold catches back on fire to resume it’s 10+ year run of appreciation in 
2013? I’m not sure, but it’s always fun to watch the bold calls the financial talking heads make as we move into a New Year.
Here’s my *BOLD* call on gold – I believe gold possibly sees a near term (6 month) pull-back to near $1500 before resuming a fairly slow continue rise through $2000 and on to $2500 over the next 5 years.
Now only time will tell….
Boom! Gold and the US Stock Market Lift Off!
And there you have it, just one day after Jim Rogers calls for gold to sell off….BOOM!
Gold rockets up $33 to close at just over $1751/ounce. Did the bargain hunter buyers miss the bottom? Maybe, but this market is so choppy anyone looking to buy is likely to get at least one more chance before gold resumes it’s rise.
Trading Range
As gold broke through what many traders consider a resistance level at $1750, we would need to see gold hold this level on it’s way back to $1800 and beyond. If gold can break through and hold the $1800 (after 2 previous failed attempts in the last month) then we are back on track towards the ever elusive $2000 mark.
Europe Debt Crisis
Right now the big unknown continues to be Europe and how they work the debt crisis out. Unless the EU can continue to 
show that they are making progress working through the current debt situation, gold is more likely to drop back down to the near term support level of $1650 – $1700 that we’ve seen for the last two months.
Pivot Point
Tomorrow will likely be a pivot point, sending gold up towards the $1800 range or pushing it back down to $1700 and below. This market has been very painful over the last few months and investors are still looking for profits where ever they can find them.
Let’s see what tomorrow brings… hold on.
Jim Rogers Looking for a Correction in Gold
Jim Rogers, long time commodity investor and advocate of owning gold told CNBC today that he believes the current pull-back in the price of gold will continue. Mr. Rogers is holding out for gold to break at least the $1600 / ounce level before buying any more of the glittery metal. While he’s not ready to sell yet, he said an even sharper pull-back to the $1200 / ounce level would make him “extremely excited” !
Gold is up currently to $1716/ ounce – it has been trading fairly consistently near the $1700 level for the last week or so as the financial markets continue to try and sort out the various mixed messages coming from the EU (European Union) debt crisis meetings.
China & India Gold’s Largest Consumers
As China and India remain large consumers of gold many believe that the overall upward trend of the last 11 years remains firmly in place with some experts calling for gold to retest the $2000/ ounce level within the next 12 months.
Jim Rogers lives in Singapore with his wife and two children. He partnered with George Soros in the early 1970’s to build and grow the Quantum Fund. He is currently occupied with his latest fund started in February 2011, The Rogers Global Resource Equity Index fund. To learn more about Jim Rogers and his outlook on gold and the economy check out his website at www.jimrogers.com
Striking it rich in California’s Gold Country
When the gold rush started at Sutter’s Mill, California in 1848 over 300,000 came to seek their fortune. Unfortunately, most left empty handed. Perhaps the most ironic thing about the California gold rush was that someone like Samuel Brannan who’s business was to sell tools and supplies to the miners, became one of the wealthiest men in all of California!
160 years later the allure of finding gold in California is alive and well, especially with gold prices approaching $2000/ ounce. So how can you find your own claim and retire wealthy? Well like most stories there’s good news and bad…read on!
Gold Bug Investor 