Gold Rebounds With Euro

Posted: Nov 01, 2012 12:01 AM

European equities and currency continued higher in overnight trading, putting gold on positive footing as trading struggles to resume in the U.S. on Wednesday.

Gold started out up $9.49 early to $1,720.29 and silver was up $0.35 to $32.21, lowering the silver/gold ratio to 53.4. 

In some ways it was inevitable gold would recover as it stubbornly clung to prices over $1,700 an ounce when the dollar was making big gains against the euro almost daily.  Still, the long-term picture for gold didn’t change much.  Both Europe and U.S. are stuck in a QE to infinity mode of printing stimulus money, so no matter what happens in the currency markets, the trend for gold remains overall positive. 

Another factor this week was Hurricane Sandy.  It’s not merely the damage done and lives lost, but that a Category 1 hurricane was able to take our financial system offline for the longest period of time since 1888.  That alone should frighten anyone paying attention.  Imagine what the damage could have been if Sandy had come ashore as a Cat 4 or Cat 5.  The damage to our financial system could have been catastrophic. 

It also points out that disasters always seem to be a surprise.  Whether it’s a stock market crash, tidal wave, volcano or hurricane, disaster seemingly comes out of nowhere.  Yet, in almost every instance, the warning signs were there.  Warnings from climate scientists and engineers fall on deaf ears as life stretches out first in years, then in decades. 

It’s the same story in our system of currency.  Go back in history and try to find an example of script currency that has survived a span of centuries.  History alone, without any assistive natural disaster, points out that script currency does not survive the test of time.  That means that almost every system of currency comes to an end at some point, except one.  Gold is the only money that has also retained value as a form of alternative currency over the years. 

I could point to quantitative easing and currency policy and sound the alarm yet again, but what’s the point?  The real core to what I’m saying is that the currency we use today as a nation is, literally, nothing.  The dollar is nothing more than blips in a computer somewhere, only a fraction of which even exists as paper.  What more warning do you really need? 

This will be my last new column for a couple weeks as I’m taking some time off to launch another book.   In my absence I’m leaving some older articles about how to buy gold and silver.  Use the time wisely and start your collection if you haven’t already done so. 

Chris Poindexter, Senior Writer, National Gold Group, Inc

Recommended Townhall Video