Gold and silver: another opportunity

Gold coins. Will gold and silver coin replace paper money soon?
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Those still waiting to buy gold and silver will have another opportunity to buy them cheap. And it might be the last.

How have gold and silver done lately?

Yesterday, gold closed at $1530.96 an ounce, and silver at $36.16 an ounce. Each metal tried several times to set new records, but fell back each time. Now both metals will trade lower next week.

The reason: economies worldwide are slowing down. Europeans aren’t feeling so superior to Americans about now, especially since the American tourists aren’t coming. Greece might default, and drag the European Union down with it. Japan is still cleaning up after the Sendai Earthquake. The American economy is also slowing down. Obama’s economic advisers know it. That’s why they quit—every one of them, except for Tim Geithner, the Secretary of the Treasury.

All these things will hurt gold and silver at first. Silver might fall further, because silver has industrial uses. Gold has few uses other than in jewelry or medicine. So gold is less sensitive to economic slumps than is silver.

How about America?

The US dollar index is actually rising. But that’s only because the euro is so weak. Americans have no reason to cheer or feel smug.

The Obama stimulus is an epic fail. Yet Obama and the Democratic Senate still want to spend more.

The Chinese are now saying that the USA is manipulating its currency, and is therefore in default. Maybe the Chinese don’t see the irony: they manipulate their currency. Still, while the United States accumulates debt, the Chinese accumulate gold. And the United States has been in technical default since August 15, 1971, when President Nixon stopped redeeming dollars for gold. Only the petrodollar system saved the country from total default.

And that system could collapse at any time. The war fever among Muslims in the Middle East has not broken. Syria just tried to provoke the next war to save itself. That fizzled out, and now we hear of Syrians rushing into Turkey to get away from their government. (If some of their fathers and grandfathers had accepted Israeli citizenship after the Six-Day War, when Israel offered it, they wouldn’t now have Syrian helicopter gunships shooting them down.) But that might make war even more likely. A desperate Syrian government might fire brace after brace of missiles at Israeli off-shore gas wells. Or the next “flotilla” to head for Gaza might start that war, or try to.

What next?

Anyone waiting to buy gold and silver cheap have another week, or two or three weeks at the most. Even then, neither gold nor silver will be as cheap as they were when Obama took office.

Gold trades take time to settle. Market timing is not worth the risk when the price might turn around in three weeks or sooner. Best to buy now, and buy enough at a time that the dealer will:

  1. Waive shipping, and
  2. Make up the difference in extra coins if the price goes down in the meantime.

I say coins because you want them to ship it to you, so that you can have it in your hand. When the crunch comes, a gold or silver coin in hand really will be worth a thousand in some warehouse. The time to prepare for it is now, not when the missiles start flying out of Syria (or Iran or Gaza City), or the Egyptians close the Straits of Tiran.