Price of Gold

I for one believe that the entire gold complex remains in a secular, global Bull Market. Our government has been excessively increasing the money supply for nearly ten years. They have been joined by virtually all of the major countries as one after another has begun to similarly inflate their money supplies. The U.S. budget deficits already approaching unsustainable levels are growing. Further, I believe that they are destined to further burgeon due to the costs of the gathering storms of our recession, the war with Iraq, as well as our war against terrorism. These will foster a further expansion of our money stock.

Our stock market is experiencing a Bear Market rally. When it ends, and prices again decline, foreigners will reduce their stockholdings. They will then exchange the acquired dollars for their own currencies. This in turn will foster a resumption of the dollar?s fall. Further, gold production is anticipated to decline for the foreseeable future and the gold hedging companies have begun to offset their hedges. Not only will the supply of gold lessen but the amount that the producers can sell will be reduced. Also, sales by the various nations under the Washington Accord are being restricted. Of immense importance is that the war against Iraq has angered not only the Muslim World but numerous of our greatest allies. I believe that this will eventually translate into a worldwide lessening of the desire to hold dollars. This too will foster a further weakening in our currency and a simultaneous move into the yellow metal.

It is easy to forget that one plus one will forever equal two! A government cannot indefinitely create an excessive amount of its currency, to pay for its profligate spending, without ultimately suffering the consequences. At some point the marketplace will only accept its money at a discount. This is the true reason behind the dollar?s secular Bear Market. Since Gold?s price is merely a reflection of the dollar?s desirability on the world market, it is destined to rise as the dollar declines and fall with dollar strength.

As all of these factors express themselves, gold will be the prime beneficiary via precious metals, i.e. certified, investment-grade gold and silver coins. Since the beginning of time gold has been the one item that man has recognized as the only true money. Paper currencies have come and gone and will continue to do so. Gold will endure because it cannot be created by the whim of government, as can their paper or electronic monetary units. We have been given numerous reasons why gold is no longer needed for money. However, until the day when governments responsively manage their finances, gold will be needed by the common man for protection against the depreciation of paper money.

Since gold recently peaked over $900an ounce, its rapid descent to its present price has tested the fortitude of those who have invested in the precious metals / gold coin market. While frightening and disheartening, it is no different than a number of similar secondary corrections that punctuated its great Bull Market in the 1970’s. During that era gold often essentially moved sideways or lower for extended periods. However, just as its Bull Market ultimately expressed itself with an incredible move from $35 to $875, I am confident that today’s Bull market will take gold to unexpected heights that will astound most onlookers.

To find out what is today’s news in the gold coin market, depending on which day you are reading this article, contact me by email, or give me a call, and I’ll be happy to walk you through what is happening in today’s economy. We look forward to speaking with you soon!

Very sincerely yours,

Jim Burg
CEO
Superior Discount Coins