34% of Americans say gold is the best long-term investment, but how many of that 34% actually own it in the form of coins and bullion? No one has that figure, but my guess would be less than 1% of the total population, and when global investment demand doubles or triples (or more) from current levels — a distinct possibility — and you paint a whole new picture for gold. You begin to understand why gold is not in a bubble at all but, in fact, is in a long-term secular bull market that is still amassing considerable potential energy. Words: 1092
So says Michael J. Kosares (www.usagold.com) in edited excerpts from an article* which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited ([ ]), abridged (…) and reformatted below for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.
Kosares goes on to say, in part:
Misery Index Rising
Misery loves company, and particularly the company, comfort and security of gold. Since the financial breakdown of 2008, the Misery Index — unemployment and inflation added together — has been in a steep upward trajectory, as has the demand for gold coins and bullion.
The Misery Index was first popularized by Ronald Reagan in the 1980 presidential campaign. Reagan used it as a barometer for how well the country was doing economically. During Jimmy Carter’s presidency, the Misery Index hit an all-time high — almost 22%. Near the end of Reagan’s tenure in the White House, he had reduced the unemployment and inflation rates meaningfully — to 7.7% by 1986. Barrack Obama’s Misery Index now stands at almost 13% using federal government statistics and we all know things are getting worse, not better. We also know that things might be quite a bit worse than what we are led to believe. That’s where Shadow Government Statistics — an alternative, and some say more realistic, rendition of economic statistics — comes into the picture.
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Many question the government’s version of the consumer price and unemployment numbers, saying they are politically motivated and reported on the low side to quell public discontent. Shadow Government Statistics (SGS) publishes its own versions of the inflation and unemployment rates and its number are considerably different from the U.S. Department of Labor’s versions. SGS’ inflation numbers reflect the same statistical methodology the DOL used in 1980. Its unemployment numbers use the same methodology the government used in 1994… If SGS stats are applied, the Obama Administration’s Alternative Misery Index would be around 34% — far worse than the Carter Administration’s economic performance, and over 2.5 times worse than the numbers used by the federal government.
Political and Social Discontent Rising
A recent Washington Post poll found 73% of Americans doubt Washington’s ability to solve economic problems. In a certain sense, Americans have begun to take the matter into their own hands. Politically, the general discontent among Americans has manifested itself in the electoral successes of the Tea Party movement on the right, and on the left in the Occupy Wall Street movement that has recently captured headlines.
Demand for Gold Coins Rising
Financially, that public concern [regarding the economy] has manifested itself in booming demand for gold coins and bullion — a phenomena that transcends both the political spectrum and national borders. In fact, the Alternative Misery Index and the demand for gold coins have risen in tandem since 2008. (Please see the Gold Eagle Bullion Coin Sales chart below.)
Gallup Poll – Americans choose gold as the best long term investment
According to a surprising recent Gallup poll (shown above), Americans view gold (34%) as the best long term investment over real estate (19%), stocks (17%), bonds (10%) and savings accounts (14%). Says Gallup:
Gold is Americans’ top pick as the best long-term investment regardless of gender, age, income, or party ID, but men, seniors, middle-income Americans, and Republicans are more enamored with it than are other Americans…That one in three Americans see gold as the best long-term investment may indicate a bubble in the value of this precious metal…[but,] at the same time, this sentiment among many Americans may be related to the growing lack of confidence in the U.S. economy. This is particularly the case among upper-income Americans, who are now more pessimistic about the direction of the economy than their middle- and lower-income counterparts. The last time this happened was during the financial crisis of late 2008 and early 2009.
U.S. Gold Eagle bullion coin sales, as shown in the chart below, are representative of the trend. Note the substantial growth from the time of the 2008 financial crisis forward. Note also that the growth is in number of ounces, not dollar volume. Bullion coin sales are seen generally by analysts as a proxy for the overall market.
Gold market amassing a boatload of potential energy
Ownership of Gold Remains at Less Than 1%
The number of people who actually own investment gold in the United States is miniscule when compared to those who own stocks — no matter what the polls say. 34% of Americans say gold is the best long-term investment, but how many of that 34% actually own it in the form of coins and bullion? No one has that figure, but my guess would be less than 1% (of the total population) and I doubt I am all that far from the truth. Compare that with the number of people who own stocks — 10% of the population reportedly owns 85% of the stocks.
Greater Ownership of Gold Will Cause Price to Skyrocket
Consider for a moment what might happen to the gold price and the supply of gold coins and bullion if, over the coming years, there were a steady progression toward 10% of the population becoming gold owners. When you consider that 34% of the population would like to own gold — no matter their present circumstances — and less than 1% actually owns it, you begin to understand why gold is not in a bubble at all, but in fact, is in a long-term secular bull market that is still amassing considerable potential energy.
In fact, it would be difficult to measure the effect of current gold owners doubling — to let’s say 2%, let alone to 10%. Let’s not forget that the inflation-adjusted all-time high for gold is about $2300 per ounce — a figure which reflects past monetary growth without regard to a significant rise in physical demand.
Blend in a doubling or tripling of global investment demand from current levels — a distinct possibility — and you paint a whole new picture for gold.
For the past decade gold has been “catching up” to the amount of money (M2 and M3) in the system to make up for understatement of the gold price due to U.S. price fixing on its way to an inflation-adjusted value of approx. $2,300 – and that is just the beginning. If, and when, we see a release into the market of the trillions of U.S. dollars being stored on balance sheets of banks, companies, and other countries around the world then the price of gold should explode upward. Let me explain why that would be the case. Words: 850
143 analysts maintain that gold will eventually reach a parabolic peak price of at least $3,000/ozt. before the bubble bursts. Of those 143 a total of 103 see gold achieving a price of at least $5,000/ozt. and 20 predict that gold will reach a parabolic peak price of $10,000 per troy ounce or more. Take a look here at who is projecting what, by when and why. Words: 745
A tsunami doesn’t start with a bang, but with a whimper. The first sign is a little hump in the water way out in the distance that is barely notable. Anyone who catches a glimpse of it simply continues to expect the day to be the same as the last many days – calm and beautiful waters along the shore. This is the point where we are, today in the Precious Metals sector. Many have seen the little roll of water out in the distance as Gold edged up in the first move of a more parabolic slope, yet most investors are mired in the same expectations of yesterday – a return for Gold to correct down into a lower base. Our analysis based on the fractal relationship to 1979 shows, however, that the mid 900s are a realistic target for the HUI by the end of the year or early in 2012; that $52 to $56 should be achievable for silver, with $58 to $62 as real possibilities; and that Gold should go the $2250 level followed by $2500 with the potential for $3,000, or a bit higher, now on the radar screen. Let me explain why that is the case. Words: 2130
Beyond its role as a diversifying agent in a portfolio, perhaps the most enticing attribute that gold offers is the huge potential for price appreciation. Although prices were stuck in somewhat of a rut in the middle part of the last decade, financial turmoil, money printing, and widespread fears over inflation have pushed gold prices sharply higher in recent years to near all time highs… Given the continuation of easy money policies by the Fed and other central banks around the world, as well as the very real possibility of more turmoil in the financial space, it isn’t surprising that many investors are looking to cash in on this modern day gold rush. For these investors looking to make a play on this elusive metal, we explore below every nook and cranny of the investing world to offer 50 ways to play gold. Words: 2768
In the East…gold is not only celebrated, acquired, worn or displayed during holidays or special occasions; it is seen as an everyday symbol of wealth. Increases in demand from China and India have driven a 7.5 percent increase in demand for gold jewelry during the first half of the year despite a 25 percent increase in the price. [Overall,] gold buying in India jumped 38 percent during the second quarter alone…China’s gold purchases jumped 90 percent on a year-over-year basis through June. In addition, demand from central banks is growing dramatically. [Such activity is setting up a] perfect storm – a tidal wave of gold demand [which can only keep prices high and escalating. Let me be more explicit.] Words: 959
If you’re interested in physical gold, I recommend you buy small gold bars which are available in a wide range of weights and can be bought for as little as 1 percent over the price of gold. [That being said, this article outlines five rules to follow before, during and after the purchase process.] Words: 813
Some physical gold, silver, platinum and palladium bullion assets, in addition to traditional paper assets, can be part of your Individual Retirement Account (IRA) or Roth account and they can be bought and sold with no tax consequence until you move money out of the account. [This short articles reveals just what bullion assets can, and cannot, be included.] Words: 573
I think we all would agree that owning a 10 kg bar of gold would be nice but that it is probably out of the question at the current cost of over $500,000! I had the pleasure of caressing such a bar recently and being surprised at just how heavy (22.045855 lbs.) it was for such a small object. Below I describe the gold coins of Canada and the United States. Words: 870
It is my contention that the price of gold rallies whenever the U.S. dollar’s real short-term interest rate is below 2%, falls whenever the real short rate is above 2%, and holds steady at the equilibrium rate of 2%. Furthermore, for every one percentage point real rates differ from 2%, gold moves by eight times that amount per year. So if the real rates are at 1%, gold will move up at an 8% annualized rate. If real rates are at 0%, then gold will move up at a 16% rate (that’s been about the story for the past decade). Conversely, if the real rate jumps to 3%, then gold will drop at an 8% rate. [Let me explain.] Words: 982
To fully understand gold’s role in an investment portfolio, we need to adopt a new mindset, a gold mindset which is, simply put: gold is not a bad investment, and gold is not a good investment. Gold is not an investment at all – gold is money.
If the temperature of full gold fever is a hot 106, we’re only at 99 now, but I can feel it, I can tell you that the temperature is rising, rising. The panic to buy gold will override everything else. It will be one of the greatest financial phenomena that most of today’s investors will ever see. It will blot out everything else like a cloud blotting out the sun. After the calm, comes the storm. We’ve been watching ten years of gold climbing amid an atmosphere of calm. The great gold tsunami lies ahead. It will be historic. Words: 480
You already know the basic reasons for owning gold — currency protection, inflation hedge, store of value, calamity insurance — many of which are becoming clichés even in mainstream articles. Throw in the supply and demand imbalance, and you’ve got the basic arguments for why one should hold gold for the foreseeable future. [T]here is another driver of the price, however, that escapes many gold watchers and certainly the mainstream media [a]nd I’m convinced that once this sleeping giant wakes, it could ignite the gold market like nothing we’ve ever seen. [Let me explain.] Words: 788
For a long time the buying and selling of gold has been outside the reach of the average citizen. The predominate banknote and the dominant currencies previously managed to position themselves very well in respect of the precious metal during stable periods. However, it is during difficult times [such as these when] quantitative easing and currency wars have highlighted the volatility and vulnerability of currencies…that the true, safe value of gold really stands out…Fortunately, it is now easier for you to convert your savings into gold… [than ever before and this article outlines the reason for buying physical gold and the advantages and disadvantages of buying gold bars, ingots and/or coins. Read on!] Words: 853