|
| By
Matt Badiali, editor, S&A Resource Report |
Thursday,
May 6, 2010
|
|
Americans
are finally waking up…
And
the story behind this chart is the alarm clock:
The chart
shows the amazing all-time high just reached by gold… in terms
of the pan-European currency, the euro.
You see, gold has been in a bull market for nine years now. But
despite this price strength – and the reasons behind it – the
average American has no idea this bull market exists. He has
no idea what role gold serves or why anyone would want some, other
than to buy the wife a birthday present.
He has no idea that huge money managers – like the central banks
of China and India… and legendary fund manager John Paulson (who
controls more than $30 billion of assets) – are accumulating
huge amounts of gold.
The chart above is why… and it's starting to wake people up.
Western governments, including those in Great Britain, Italy,
Greece, and the United States, have promised ridiculous benefits
programs to their citizens… and they've taken on crushing debt
loads. As you read this letter, those debt loads are ripping
apart the euro currency union, which began in 1999.
Your typical American can't even find India on a map. He believes
the Chinese are evil job-stealers. He doesn't give a hoot what
happens in South America. But he does read the newspaper… and he
has seen that Europe is in the middle of a giant crisis.
Our typical American has also read that his country is in a
similar situation. He sees runaway government spending. And now,
with gold approaching a bull-market high in dollar terms… and sitting
at a new high in euro terms, he actually sees the result: a
flight from paper currencies into real money, gold.
This flight has sent gold from $1,100 an ounce to $1,180 in just
the past month. I believe this rise is driven by the mountain
of money controlled by central banks and large institutional
investors.
India, for example, made major headlines last year when it bought
200 tonnes of gold to diversify its currency reserves. China has
more than doubled its gold holdings since 2003. It's also one of
the largest owners of the big gold stock fund, GLD. John Paulson,
one of the world's biggest and best money managers, owns more than
$3 billion of that same fund. He also owns more than $1.5 billion
worth of gold miner AngloGold Ashanti… and several other huge
mining positions.
Money is flowing into gold because big money managers know they
shouldn't park their money in the euro anymore. It's a piece of
garbage. And Obama & Co. are promising free
lunches to everyone who can help reelect them… This is harmful
to the U.S. dollar's long-term value.
Gold is now reasserting itself as a viable place to park wealth.
After all, with interest rates so low, you're not missing out on
fat interest payments by owning gold, which pays no interest. The
Western debt problems will take a long time to play out. I believe
they could send gold to $2,000… even $3,000 an ounce in the
coming years.
Would I like to buy gold at cheaper levels than $1,180? Sure. If
you've been reading DailyWealth for a while, you
probably have. But if you haven't yet, don't worry. You
still have a huge tailwind at your back.
As shown by the new ALL-TIME high gold just reached versus the
euro, the world is finally waking up to the paper currency
crisis… and folks will continue to accumulate gold.
Good investing,
Matt Badiali
|
|
