As my dad is fond of saying, we’re off like a herd of turtles. It was a surprisingly lackluster beginning to a trading week that by rights should be more upbeat.
Gold started off down $1.94 to $1,615.20 and silver up $0.01 to $28.13, for a silver/gold ratio of 57.4.
The dollar gained ground against overseas currencies in overnight trading Sunday, putting early downward pressure on commodities. Platinum, palladium and copper joined gold and silver lower while crude oil bucked the trend moving higher in spite of the currency headwinds.
Gold beat the currency spread but it’s still odd to see it trading lower under circumstances where one would expect traders to be a bit more frisky. There are good reasons to be bullish on gold, though cautiously so as volatility will be with us for some time.
We have previously discussed gold as it relates to other investments, like the rigged game we call the stock market. Not only are equity markets rigged, but they operate with very little accountability. The SEC is a toothless guard dog after decades of having its budget savaged and can’t ever seem to find actual criminal conduct in any but the most blatant of con artists like Bernie Madoff. Even when the evidence is compelling the corporate criminals, the real crooks in our dysfunctional markets, get off with little more than a stern talking to from the SEC.
It’s no accident central banks accumulate large stocks of gold bullion and not private equity placements.
Warren Buffett is right when he says gold is not a growth investment. When you put 1 ounce of gold in your safe, you’re not going to open it 10 years later to find 1.5 ounces. That 1 ounce of gold might not even be worth the same amount of fiat currency that you paid for it.
You should not be buying gold as a speculative investment, but as a hedge against the eventual downfall of the debt economy and endless manipulation of the computer blips in your bank account that goes under the fancy name of “currency policy”.
If you make money on gold and silver purchases, it’s not because your gold is worth more. It’s because the script you’re trading it for is worth less. It’s the honesty of physical gold that you’re buying; a fixed quantity of a hard asset that will maintain some relative worth as measured against the fiat currency dejour.
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