AGE Gold Commentary is our regular report analyzing trends in precious metals and rare coins. We monitor domestic and international markets and extrapolate from our 30 years in metals to place current events into a hard asset perspective. View archives.
9/19/2002: Gold pushing higher! Prime season begins.
Greetings from Dana Samuelson, Owner of American Gold Exchange.
Gold has rebounded from recent lows and is currently trading in the $320 - $325 range. In the last several trading sessions, gold has firmed up almost $10 and looks to go higher as the gold market factors in:
U.S. intervention in Iraq – President Bush appears to have already made up his mind regardless of what the UN advocates. Interrupted oil supplies usually mean higher gold prices.
Increasing world tension – The recent assassination attempt on Hamid Karzai and renewed terror attacks in Israel come to mind, not to mention pending war in the Middle East and ongoing terrorism. In times of instability, the world typically looks to gold as a safe haven.
A weakening U.S. dollar – After rebounding somewhat from recent lows in late August, the dollar is once again shedding value against other currencies. A lower dollar usually means higher gold prices.
An anemic U.S. economy – Productivity of U.S. companies grew at merely1.5% in the second quarter, which was a sharp drop from the 8.6% rate of growth in the first quarter. U.S. industrial output fell unexpectedly in August and consumer prices rose unexpectedly also. Relevant stories are posted here: http://www.amergold.com/newsroom/inflation.shtml
A dismal outlook for U.S. stock markets – The U.S. stock markets continue to resemble roller coaster ride at Disneyland, surging and swooning a couple of hundred points at a clip. Despite these undulations, stocks remain in an undeniable downward trend.
Look at the10-year charts of either the DOW or the S&P 500 and you’ll clearly see a firm right shoulder formation in place. A right shoulder formation usually implies an imminent drop and a continuing bear market. This kind of formation is extremely dangerous for anyone who believes a bottom is just around the corner, or thinks that “buy and hold” is a sound strategy in today’s environment. Use the following link to view charts on the DOW or the S&P 500:
Chatting About the Big Picture
I was speaking with a regular customer on the telephone yesterday. We had an interesting conversation. “Dana,” he asked, “have you ever thought about how our own government keeps its own books? They make Enron and World Com look good, and everyone buys it!”
We chuckled over that. Then he asked, “Where do you think gold is going in the long run?”
I replied: “I believe gold is going to be trading above $360 in the next 7 to 12 months.”
“But how about in the longer run?” he asked. “Do you think we are due for another market like the one we had in 1980, when gold was $850?”
My answer: “YES! Sometime in the next 5 to 15 years we are going to see gold priced in excess of $1,000 an ounce. Some say gold will be $2,000 to $3,000 an ounce. I think that is optimistic but possible. In fact we authored an extensive research report over a year ago entitled ‘Gold at $1700,’ which carefully argues that gold has an excellent chance of doubling its previous high of $850 an ounce in 1980.
“In 1982, when the DOW was around 1,000, who would have thought it could possibly break 11,750? No one did, but it happened in 2000. Keep that in mind when you read our report. We clearly have passed a major turning point and these markets look a lot like 1968 to me. By 1974 the DOW had fallen in half from its 1968 level and gold was on the way to multiplying 20 times over.”
He ended our chat by saying, “I’m going to check and see how much cash I have in my account. It’s stupid to keep excess money in cash right now the way the government is printing money like wallpaper and while interest rates are so low. They are practically giving dollars away. Gold is the best place to be for my cash for the time being and probably for the long run as well, the way things are going.”
I couldn’t agree more!
Prime Buying Season
We told you in June to “Buy the Dips.” In late July, when we issued our last email alert, gold was $303 and it was a great buying opportunity. Today gold is $323. In three of the last four years, between the beginning of August and the end of October, gold has surged in price, which is typical as the summer season ends and the fall gold buying season ramps up. The largest physical demand for gold annually occurs between September and December. And keep in mind these numbers do not reflect in any manner whatsoever the additional 10% to 30% short term upside potential a real breakout gold market can create.
1998 August Low $273.40 October High $300.80 Gain 10%
1999 August Low $252.85 October High $323.25 Gain 27%
2000 August Low $272.60 October High $274.00 Gain 0%
2001 August Low $266.40 October High $291.65 Gain 9%
Remember, this bull market in gold is still in its infancy, and we’ve told you there will be some bumps along the way. But the trend is your friend, and the trend for gold is definitely UP.
Conservative recommendations for gold investors
For the last 18 months we have strongly advised our customers to accumulate U.S. Gold Eagles bullion coins and select classic U.S. $20 gold double eagles and $10 gold eagles. All of our recommendations have made advances in price during this period of time. The big gains still lie ahead, so it’s not too late! If you get started now, or add more to your existing gold position, you'll stand to gain the most when the market truly boils over.
Please visit our website, www.amergold.com, for complete gold investment information.
Power Pair #2 – Our highest recommendation!
U.S. $10 Liberty (MS 63) and $10 Indian (MS 63) gold eagles.
New special for gold investors! These classic U.S. $10 gold eagles are fantastic portfolio builders. In 1989 they traded dealer-to-dealer for more than $5,000. Available today for as low as $1150 per pair, near their lowest prices in 20 years! They offer true scarcity, beautiful designs, and high collector demand at rock-bottom prices. Ready to pop in rising coin market! Don’t miss them. Our highest recommendation!
1-oz. U.S. Gold Eagles
No IRS reporting requirements for these bullion coins.
British Sovereign "Kings" Brilliant Uncirculated
These are the best classic European gold coin for popularity, price, and scarcity.
$20 Liberty, in MS62-64 condition and $20 Saint-Gaudens, in MS63-65
These gorgeous, historic coins offer complete financial privacy, excellent leverage to the gold price, high collector and investor demand, and are still downright cheap today.
Prices are now moving up, but the big price increases are on the way. It's not too late to buy these classic U.S. gold coins near their 20-year lows.
Let me repeat, in 20 years we've never been more bullish on gold than we are today! We highly recommend aggressive purchases of gold now.
American Gold Exchange, Inc.
AGE Gold Commentary
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