Gold Panic - time to buy or sell??

With the price of gold steadily dropping since its peak in September, we’re seeing pessimism and panic in the market. Try not to be swayed by short-term events and realise that in the long run the price of gold will rise. This is because money printing is the most likely solution the leaders will choose to solve the European banking crisis and there’s a good chance we’ll see QE3 in the US during 2012. The more money they print, the less valuable the currency becomes which is positive for gold.

You’ll find many examples in history where nations opted to solve similar problems we face today in the world using QE to create liquidity. During the great bull market of the 1970s, for example, gold went from $35 to over $850 per ounce. In that spectacular rise there were several 50% corrections in the gold price and I’ve been saying all along that the market will become more and more volatile, so I would be using these periods of pessimism and panic as a wonderful buying opportunity.

Gold will rise as investors realise that gold is a valuable asset to store and protect wealth during periods of inflation or recession. Whichever economic environment persists, the value of gold will be driven upwards by the efforts of central banks to create liquidity and debase fiat currencies.

To quote the legendary Jim Sinclair:
“Don’t allow your emotions to direct your decisions. Your emotions will always be your best contrary indicator you have. You have to examine the circumstances and ask whether or not the reasons why you’ve committed to something have changed. And if they haven’t changed, you simply need to buck up and go the course because you’re right.

People are beginning to literally crack, defined as shifting their total focus to their emotions and away from their intellect. I’ve seen emotionalism in areas where it doesn’t belong, where it’s never existed before. I’m in total shock.”
If you’re already freaked out by the movements in gold so far, you might want to sell up because I’m warning you that the ride is going to get much bumpier on the way to gold at $5000. In 2012, I anticipate that we will see gold going at least to $2500 an ounce.

Central banks remain buyers of gold. South Korea, for example, increased its gold reserves by 39% in November alone. The fundamentals for gold remain intact. No market ever moves in a straight line. The long-term picture for gold remains positive. So hang in there, it will be well worth the ride!

For those of you who have not yet invested in gold and silver, this is a wonderful opportunity to get in at a good price before everything skyrockets once again.

Gold Price Down - Great Buying Opportunity!

As I write, gold is at USD$1572 an ounce and silver is at $28.13 an ounce and many are getting very jittery and selling their precious metals. This is normal, especially for those who have bought recently at around $1800 – 1900 an ounce. However, remember I have said all along that we were going to see massive volatility. This is to be expected, but fundamentals haven’t changed. Our global economic system is based wholly on debt and the value of fiat currencies is gradually eroding as QE continues and while banks are “too big to fail.”

The fact that prices have dropped so significantly is one of the main reasons I always tell people NOT to borrow money in order to buy gold and silver. This is where you can come unstuck. It’s much too risky and it’s going to get riskier as time goes on. I wouldn’t be surprised if gold went as low as $1300 an ounce and the lower it falls the higher it’s likely to bounce back in the future.

No one can tell exactly where the bottom is for this current dip, but I can see on the charts that this looks like a wonderful time to buy. The sensible people are buying while the sheeple are selling.

If you have cash in the bank and no precious metals at all, you are fully invested in the fiat currency system and you have all your eggs in one basket. This is a huge risk as you could lose an enormous amount of money or you might lose it all. In Lithuania right now, there are huge runs on the banks with people scrambling to get their money out. In Greece and Italy, depositors are withdrawing their money in droves from the banks. I would suggest that you have AT LEAST 10% of your cash in gold and silver (mainly gold), and you will at least know that you have insurance in case there is economic collapse and that 10% will be your saviour.

To quote the legendary Jim Sinclair,
“The most important thing is volatility. One thing this shows you, and it increases continually, is this is the wildest chop we’ve ever been in, in the history of trading gold, in terms of ups and downs. It means to me that gold is going to rise to prices even higher than I expected....” and Jim has been saying that gold will go into the $2000s and possibly even up to $4500 or more…

So what are you waiting for? This is a wonderful buying opportunity folks! Don’t be scared off, act as a contrarian, buy when others are thinking of selling.