Premiums of uncirculated $20 Gold St. Gaudens, such as MS63-MS64s, continue to be squeezed well below the buy signal line, which is anything under 20% over spot gold. Furthermore, premiums on MS65 and MS66 gem specimens are ridiculously cheap in historical terms.
If charts are any indicator to make acquisitions then this is an immediate BUY SIGNAL.
Thus far in 2016, the price of gold has moved up 27% off its December 2015 low. In ten of the past 16 years gold has moved up in the waning months of the year and six of those ten years saw increases of 10% to 23%. This upside bias was strongest during years similar to 2016. While near term charts see the yellow metal trading sideways to slightly lower until the election, the longer term bullish trend remains firmly in place. With the election approaching, there is little on the immediate calendar that would indicate an improvement of the current market timidness.
However, after the election and in the New Year, the charts indicate that the bull market in gold appears to be firmly in tact. The fact to the matter is that the economic woes due to out of control sovereign debt crisis here and abroad is likely NOT going away.
In fact, as investment TV personalities debate how best to deal with a crisis, our potential leaders in Washington go on bashing each other with little mention on the economic policy. At the end of the day they will do what they have always done throughout history if a crisis hits. Print more money.
We now hear from the Federal Reserve that rate increases are possible but that the economy remains in tenuous circumstances at best. If the economy does falter at all, then the zero rate policy of the past 8 years will remain the same. If we do see some eventual shoe drop, then the Fed will do what it has done since 2008…print more money!
I believe the situation is not good and remains uncertain giving cause to look at a gold position as one of prudent insurance against the coming crisis in the years ahead. If you think differently, I would like to ask you a question.
Do you believe America’s financial problems from 2008 have been fixed?
Do you think it is possible to have another significant crisis similar to the banking crisis of 2008?
If you are concerned that the problems are actually exacerbated and that another crisis is looming…you are not alone.
The question is…
What can I do to hedge now?
Which ever candidate wins the White House, they are going to be faced with serious economic problems both here and overseas. The situation is dire and could become much worse if growth both here and abroad does not soon begin to prevail.
Western countries, China and Japan have thrown trillions of dollars at the problem and still economic growth is stagnant. Growth in the U.S. is a dismal 1-2%, Europe is even worse and Japan is in contraction. The Middle East is horrible with many countries exhibiting 40-60% unemployment. The China experiment has slowed from double digits to now a 5-6% projection for 2016. Where is all this growth we were supposed to see from the trillions of dollars invested to spur us into panacea.
It simply hasn’t happened, unless of course your on Wall Street. The evidence of an impending crisis is piling up all around us…in recent months we’ve seen some $8 trillion erode from world markets and I think Wall Street is next. Maybe not this year, but hell is coming.
Bond Guru Bill Gross says, “get out of bonds.” He has warned of a collapse in corporate bonds. To make matters worse, big banks have ballooned to sizes even larger than that of 2008 when regulators said they were “too big to fail”. What did regulators do? They implemented policy to make them even bigger.
Both sovereign debt and corporate debt has swollen to ridiculous levels. Our national debt has exploded and it is just business as usual from Washington. It took just over 200 years for our national debt to swell to $8.5 trillion…and in just 8 years it is now $19.3 trillion and increases $10,000 per second!
Of course we are told, “everything’s okay…nothing to see hear people, just move along we have it all under control.
Simple logic confirms, at least in my mind, that it is a race to devalue. How else can the debt be serviced, forget about paid? The $20 trillion question is, can it be done without causing an eventual spike in inflation? According to many economic theorists NOT associated with a Wall Street firm or a government agency, the answer is NO!
So back to the question. What can I do to hedge now?
With premiums on $20 gold St. Gaudens in relationship to melt values well below the line in which confirms a buy signal, I believe they are the best bet to put your gold investments now.
Further, if there is any cause for a financial panic we could see an explosion in prices in short order. I certainly don’t want any type of unforeseen crisis to unfold, but I certainly wouldn’t bet against it by NOT owning a long position in gold. However, fundamentals affirm higher prices are a certainty with or without a crisis.
While most buyers love to expound on the buy low – sell high mentality, few actually practice it. Once the pendulum starts to swing in the other direction, as it most certainly will, the herd mentality will bring forceful buying back to the market, and the current premium lows will evaporate.
So what does one do to take advantage of the current situation? The first thing to do is BUY when premiums for $20 gold coins is squeezed like it is currently. Second, and probably the most important, is buy on the dips. That time is NOW!