One would think that American’s had learned their lessons in the Fall 2008 as the stock market careened out of control. Unfortunately, we suffer from amnesia and forget the events of almost two years ago. The Dow Jones Industrial risen almost 80% from its March lows. We are lulled into believing everything is fine again, wrong. The market rally was driven by liquidity injected by the Federal Reserve. Take away the liquidity and you get gut-wrenching drops we have seen in the past two weeks. It appears that individual investors are slow or not responding at all to investing in Gold and Silver or Precious metals.
This is the opposite of what is occurring in other parts of the globe. For example, In Greece the government has imposed restrictions on trading British Sovereign gold coins and the price has reached a reported $1700 per ounce. Despite of the restrictions the Greek Central bank has reported selling and average of 700 coins a day.
Yesterday Eric Sprott who runs Capital Market Sprott Asset Management plans on raising over $235 million to buy 6 metric tones on gold. Finally, on May 26, it was reported on Bloomberg speculators are buying Gold faster than the world’s biggest producers can mine it. Buying in 23 developed nations has surged 16 percent since mid-April.
Some argue that gold is overvalued, but on an inflation-adjusted basis it is selling at half its peak value in 1980 and its adjusted value should be $ 2,266.00 per ounce.
Investment, including bars and coins, almost doubled to 1901 tons last year. Central banks and governments are also added gold at a rate of 425.4 tons last year, the first expansion since 1968. Finally on the Comex futures the bets for higher prices is within 13 percent reached in November.
Today, it was reported that Gold vending machines or ATM’s are going up around the world including Europe, Asia and the Middle East. The company that produces them,is reporting that demand is brisk and can barely keep up with it.
These news stories should serve is here in the United States, as a wake up call. American’s are still under invested in Gold and Silver and do not comprehend the concept of protecting ones wealth. We believe that we are immune from economic contagions and woes occurring elsewhere. This may prove to be a fatal mistake.