In my last blog posting, I suggested that things might get really active come the fall.
Well, Labor Day Weekend has come and gone, Congress is back
in session, and things are starting to heat up quickly, starting with gold
passing $1000 an ounce September 8.
Most people who think about gold at all know that the run up in gold prices is fueled largely by concern about the value of the dollar. The prospect of the Federal Government passing some monumental and expensive health plan puts the issue of Federal Debt, deficits and a falling dollar more in the view of investors and individuals who may not be investing anything at the moment, preferring to stockpile cash.
While it is significant that gold passed $1000 today, it could drop back below the psychologically significant $1000 mark, or it could continue to rise. Typically, after a significant rise, increased demand and prices will encourage more supply into the market, which could cause gold to fall in price. I do not think there is danger of a significant fall in gold prices at this time, but gold, especially in the short term, is completely unpredictable. For the long term however, all indicators show gold will rise significantly.
There is another great opportunity lurking in all this
excitement.
With all the attention now focused on gold, there are outstanding deals right now on truly lovely high end rarities, including rare and key dates, as well as a smattering of collector favorites like rare date gold and better date Morgan Dollars.
It is also a great time to be buying Pattern coins. After many months where supply of
decent material was virtually unavailable, higher prices led to increased
supply and then a price dip this summer, especially after a Heritage auction
which was poorly attended and bid, resulting in some low price points. While there is no major supply surplus of
Pattern Coins, prices on some
exceedingly rare and desirable pattern coins are suddenly very
competitive. I expect all of these
above mentioned coins to strongly out-perform gold in the long run, as they
have always done historically.
That is a strong statement since buying gold now is also an
excellent move. My top choices for
gold now are MS-65 common date St. Gaudens $20 gold coins, 1oz gold bullion
coins like Krugerands, Maple Leafs and Eagles, and of course, bar gold that can
be put in your Individual Retirement Account – an instrument rapidly gaining
popularity, which we started offering earlier this year.
In some ways, it doesn’t matter what you buy in the hard asset area. If you like rarities, buy those. If you like gold, buy gold. If you prefer silver, buy silver. The big mistake is not buying now. There is a danger of panic and explosion in these markets, so it is better to get your stake in this arena solid BEFORE potential panic can erupt.
I’ll keep you posted with another blog entry either during or after the giant Long Beach Coin Show which starts Thursday, September 10. If you find yourself in the Long Beach area, stop by and say “hi.” I’ll be setting up with the good folks at Miracle Mile Coin Center, right across from the PCGS booth.
* The main cause of inflation is the printing of dollars by the Federal Reserve, fueled by gargantuan and growing US government debt, which is approaching 12 trillion dollars. If the Federal Government continues this spending binge, it will only increase downward pressure on the dollar.