Gold Up, Next Week Could See More Gains

Posted: Dec 05, 2011 12:01 AM

Gold was up on the week with relatively stable prices and an upward trend that seems likely to continue into next week.  The factors weighing in favor of gold and precious metals next week are generally solid indicators for metals. 

Optimism in equity markets was bolstered by an agreement between central banks around the globe, including the Federal Reserve, to make sure European banks can get cheap dollars.  Flooding the global economy with dollars was like pouring gasoline on smoldering equity markets, which exploded on the news.

The wave of cheap cash also translates to good news on gold and silver prices.  As the Federal Reserve funny money policies go global, there will be widening inflationary pressures which are ultimately bad for cash savers and good for precious metals investors. 

Meanwhile, the U.S. economy continues to muddle through something resembling a recovery.  The job numbers improved last week and unemployment dipped to a two year low.  Were the U.S. economy operating in a vacuum, that would be great news.  Unfortunately, we’re not strong enough to survive the European contagion and the banking sector is gambling our collective treasure on European bonds.  Since there was no accountability for the last disaster, there’s no incentive for them to change their behavior; they simply changed venues. 

All the factors taken together puts us in an odd predicament:  On one hand, the U.S. economy is showing signs of life.  On the other the potential for epic disaster is larger than ever.  Whatever is looming ahead, you can expect that you and I will be the last ones to hear about it. 

If you don’t have emergency stash of gold and silver, it might be a prudent precaution to take advantage of the holiday season to put some back for a rainy day.  You can buy gold by the gram and five gram bars in convenient retail packaging.  The markup is significantly higher for small quantity retail purchases, but that’s the price of convenience.

A convenient way to bank some silver away is 90 percent silver junk coins.  Retail pricing can be slow to react and you can sometimes pick these up at a small margin over the spot price.  These are handy to have around if you ever worry you might need a source of barter.  I would not wade into coin collecting unless you’re willing to put the time into really learn the business.  You can also buy “chubby” copper ingots but they’re more difficult to haul around. 

For larger purchases, I would advise consulting with a professional.   

Chris Poindexter, Senior Writer, National Gold Group, Inc

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