Tuesday, June 28, 2011

Gold Below $1500 A Bargain I Used To Say

I started reading Zero Hedge about the same time I ran into FOFOA.  For a "long" time (a little over a year), I used to howl like a banshee (or would that be bleat like a sheep?) that gold was a BARGAIN at under $1500.  I wrote this over and over...  I believe I started writing that when gold was under $900.  I still wrote that as gold passed $1040 ("The India Put" -- that was India bought that 100 tonnes).  I wrote that as gold sailed into the $1200s and higher.

Gold just reached to an all time high of $1550 or so recently.  But, it has fallen back to around $1500, most of that $50 decline in two days of trading.

I have asked myself: Is gold still a bargain at $1500?

I answer yes.  Although a lot  of "easy money" has been made (although you would have to SELL that gold to get the "easy money"), I believe gold has LOTS of upside left.  NO WAY I am selling mine.

At this stage I am only going to be an incremental buyer: I will buy less oz than over the past three years or so, but I will buy as money comes in.  I had already attained my goal at end-2010 of having 10% of my net liquid wealth in PMs (75% - 80% of that in gold).

Buying gold has ALWAYS felt very expensive to me...  (that is a topic I will address later, the idea is still brewing).

Gold provides the single best diversification to anyone who has no or little gold.

I do not if gold is on the verge of a big price fall or not.  FOFOA's magnificent article "The Shoeshine Boy" explains what will likely happen if gold's paper price craters: the physical will disappear from the market.  Try and find gold at COMEX's paper price of $400...  You will not be able to, not even if you would pay $600 or even $1000.

NONE of our problems have been solved.  Money supply is going up all around the world.  Our leaders refuse to take the hard steps necessary to fix the financial system(s).

While maybe not a "bargain" (or as much of a bargain as it used to be) at $1500, it is still a "Buy".  I will be there with many of you, buying as the price of physical gold reaches ever higher.


  1. Robert,

    One of the things I found most interesting about the ANOTHER POV was that the giants wanted AU to be low priced so as to acquire more of it with less fiat (supposedly to placate oil kingdoms that want X-ounces of gold for Y-barrels of oil). So we can see this rising price working against TPTB and thus the giants will work to bring prices down to acquire more of the real as opposed to the paper. Consider that now gold lease rates are negative for up to a year. There is a definite attempt to add liquidity to the paper market to drive down the prices.

    Warm regards,


  2. Robert,

    The one thing I like about FOFOA is how he admits gold could go down in the short term. But even if you buy today at $1,500 and it drops to $1,200 next week, you won't feel like much of a loser after the fractional reserve bullion banking system of paper promises breaks, and gold is 'repriced' north of $50k / oz.

    Having already established a position, I likewise will most likely add during the dips, but for people without any physical, I always recommend buying at whatever the price may be and not trying to time the market.



  3. Haha, it was expensive six years ago at $500, and now it's cheap at $1500.

  4. It felt high at $700 when I bought my 1st 2 Kruegerands in 2007 or so. Then Silver looked pretty good at $10, $12, & 15.

    It's ALL good, as long as you have some. Somewhere along the line, it's an insurance policy that either I will use, my daughter will use, or perhaps one of her children will use. Until that day comes, I buy a little more ($500-$1,000) every month, no matter the price. Lately, I've rounded out my silver inventory with Junk Silver (to have smaller denominations and in case the govt decides to confiscate from "silver hoarders" [I'll call myself a coin collector]).

    Best regards,
    The Navigator

  5. Why is it people think/have read the gold spot price could correct sharply given the enourmous demand from emerging markets (China, India, Middle East etc)?

    Is it to do with price manipulation?


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