Gold was up slightly in early trading after trading sideways most of the night in overseas markets.
In early trading gold was higher by $1.07 to $1.657.37 and silver was up $0.06 to $30.73, for a silver/gold ratio of 53.9.
The moves in gold prices are largely in line with the dollar slipping against the euro and investors staying on the sidelines waiting on the Fed meeting in Jackson Hole, Wyoming, tomorrow.
My sense is still that the Fed meeting is much ado about nothing, but a surprise stimulus announcement would send prices through the ceiling. A more likely scenario will be the Fed reminding everyone how closely they’re monitoring the markets, taking another shot at Congress for not doing its job, and maybe some more bond buying in September or October.
A disappointing Fed announcement would almost certainly push gold lower, but my estimate is the worst case downside would still be above $1,620. If the selling gets silly and prices drop back below $1,600, then lock in prices on a small buy. Until then expect sideways trading on low volume.
When precious metals prices surge higher there is one way to continue making gold and silver investments, if you have the time to learn the market, and that’s collectible coins. The margin on coins tends to be much higher and there are many factors that affect value beyond the composition of the metals.
If you’re going to get into coin collecting, I would definitely recommend doing a lot of reading before you put any money on the table and keep your reference book handy. Also keep in mind that, in a crisis, you’d be trading largely on the amount of gold or silver in the coins.
When precious metals prices are low, I still suggest staying with bullion-priced gold and silver products from well known names in the industry. Shop competitively to buy and sell at the narrowest margin relative to the spot price that you can find. Some vendors list their buy and sell prices right online, making comparison shopping a lot easier.
Like with any other investment, be cautious and prudent. There’s rarely any reason to rush for an investment that you’re planning on holding for ten years or longer. Don’t go overboard, stick to your percentages, and don’t have too much of your wealth tied up in any one asset class.
Chris Poindexter, Senior Writer, National Gold Group, Inc