Gold on the Rollercoaster — Volatility to Continue (September 30, 2008)

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To be honest, no one really knows if the rescue package just approved by Congress will restore order to world financial markets – but whatever the impact, I feel confident about the future of gold.

For now – and the near future – gold is caught up in a mass liquidation of virtually all assets.

Expect “high-stakes” volatility in gold to continue as world financial markets size up the U.S. rescue package . . . and realize that America’s politicians have thrown them a lifeline tied to a leaky boat.

Retail gold investors – real people like you and me – have a different view of the world and economic risks ahead than do the large institutional players and their armies of analysts.  Unlike the large institutions, the small guy has been buying more gold lately as can be seen in a pick up in physical demand for bullion coins, small bars, and investment-grade jewelry.

Private investors – from high net worth individuals to the average Joe and Jane – are swapping cash for gold coins, small bars, and bullion ETFs.  This is now a global phenomenon as retail outlets, coin fabricators, and refiners report a gold rush of demand around the world.

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Gold — After the Fall (September 15, 2008)

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Gold has fallen more than $250 from its record high this past March to its recent low last week.  Most analysts are saying that gold has been pulled down by the drop in oil, the bounce in the U.S. dollar, and an easing of inflation expectations.

But, in my view, gold’s swift decent in the past few weeks is a direct consequence of the unfolding global credit crisis.  In short, gold has been an innocent bystander to the financial hurricane hitting Wall Street and global markets.

The yellow metal’s own positive fundamentals – and even its role as a safe haven in turbulent financial seas – have simply been overwhelmed by the massive storm-surge flight to cash and the indiscriminate selling of securities and commodities, selling that has been amplified and accelerated by automatic program trading, short covering, and technical triggers on the way down.

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