Archive - Apr 19, 2013 - Blog entry

No, We Shouldn't Kill Everyone from a Particular Religion

With stocks short-term oversold it certainly wasn’t much of a surprise that options expiration Friday could manipulate volume and performance. Da Boyz in the options pits (mostly electronic now) were hunting down strike prices to exercise existing options as they can. It’s a technical event with an outcome that surely can mislead Main Street.

Gold doesn’t blow stock bubbles. It doesn’t manipulate data. Gold doesn’t control interest rates to benefit the big banks at the expense of everyone else. Gold doesn’t lie under oath, nor does it channel the public’s money into foreign banks.

Participants don’t see them. Outsiders shake their heads, until they get sucked in. Central banks create them, but deny their existence. Risks no longer exist. Take natural gas.

From Chinese Gold Exchange...

Back in 1980, just as the gold price blasted upwards past $800/oz, buyers reportedly lined up in droves at various bullion dealers to participate in the rally. Investment analyst Jay Taylor writes, “I remember 1980… there was panic buying of gold by people in the streets of New York City. They were lined up around the block to buy gold and Krugerrands at that time.” That flurry of buying ended up representing a classic top. As gold failed to move higher, the speculative frenzy soon reversed into a despondency that dragged gold into a twenty year bear cycle. For those investors who bought at the top, it was a hard lesson learned.

Government mints, bullion refineries and dealers around the world report a dramatic increase in demand for coins and bars.

Bullion refiner, MKS said that “physical demand is extraordinary.”

In terms of transactions, gold buyers outnumbered sellers by a ratio of nearly five to one yesterday. In terms of volume, gold buyers outnumbered sellers by a ratio of nearly nine to one yesterday. Meaning that there were more buyers than sellers and buyers were placing larger orders than those selling and this trend has continued today.

U.S. gold coins sales have been at record levels this week. Lower prices and the tragic events in Boston may have contributed to increased buying due to concerns about the risk of terrorist attacks.

Premiums are rising in Europe and the U.S. and there are delays of a few weeks on some smaller coins and bars showing the growing tightness in the market.

Japan is not facing much criticism at the G20 meeting and this is encouraging fresh yen sales, which in turn is helping lift other currencies. We play down the speculation that China will widen its dollar-yuan band imminently.

Here is Part 2 of my article “The Argument of Bitcoins v. Gold Laid to Rest, originally released at my blog, www.theundergroundinvestor.com on April 9, 2013. Yes, money that is real and tangible is really better than money that is just a digital valuation backed by air.