I read two very interesting news reports today. One was about the spread of global inflation.
Last week came word that the Gulf States were piling up $1.5 billion net per day in oil revenues. In China, not an oil exporter, the rate of growth of foreign currency reserves has slowed down recently, but the country still nets about $1 billion per day. Overseas central banks accumulate Everests of these dollars, and lend many of them back to the United States – by buying U.S. Treasury bonds. To give you an idea of how fast this mountain of money is growing, foreign central bank holdings of U.S. treasury bonds, held in custody at the Fed, are increasing at a 37% annual rate.
According to Peter Schiff, Gold should be back at $1,200 by year end. He also thinks that it’s impossible for the US dollar to make a comeback because the Fed will not raise interest rates for fear of pushing the economy into recession.
He states that Gold should hit $2,000 per ounce in 2009 and within 4-5 it might even hit $5,000!!!. He also thinks that Silver’s rise will be even larger than that of Gold!
Its the eve before Black Friday. I went to grab an ice cream cone and stopped to admire the lines outside BestBuy. It was 11pm and there were probably 250 people camped outside in the cold. Even the parking lot was entirely full.
Thats one reason I like to shop online at Ebay. Its great for buying new or used stuff at great prices. Its especially good for increasing my coin collection. I started buying gold and silver coins 2 years ago. I’ve bought them all from online retailers like Apmex.com or from Ebay.
Even though the markets were down today, my stock portfolio was up 3%. This was mainly because I’m heavily weighted in Oil and Gas Canroys and they were all buoyed today on news of a major takeover. Abu Dhabi’s state-owned utility company, National Energy agreed to buy out PrimeWest Energy(PWI) in a deal worth $5 Billion. PWI was up 30% on the news and all other canroys were up around 5% as well.
Most people think that since Gold was in a bear market for nearly 2 decades (between 1981 and 2000), its a poor investment. They also claim that its speculative, you can’t leverage it, and its highly illiquid. But none of these are really true.
In January 2000, Gold was trading at less than $300/oz. Today its at nearly $700/oz! Its been in a stealth bull market and not a lot of people have been talking about it.
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