It’s Still Not Too Late to Get into This Bull Market
Tuesday, April 18th, 2006
By Michael Lombardi, MBA for Profit Confidential
I couldn’t find any dedicated articles on it in the major newspapers today. Some papers didn’t even mention it all. No, the big news in the financial newspapers today was on oil reaching $70 U.S. a barrel.
To me, the big financial news yesterday was this:
Gold bullion prices jumped $18.90 U.S. an ounce–its biggest one day price increase since the September 11, 2001 terrorist attacks in the U.S. Gold has moved to another record 25-year high and the media isn’t picking up on it. Shhh… Better keep it quiet anyway. The less people that know about the bull market in gold, the more money we will make on our gold stocks.
I’m sure the Federal Reserve is watching the gold market and possibly worried gold could replace the U.S. dollar as the official reserve of many foreign currencies… somewhere down the road. That’s one reason I believe interest rates have been rising in the U.S. Gold doesn’t pay a dividend. But with six-month U.S. T- bills approaching a payout of 5%, the U.S. dollar is obviously a good alternative to gold bullion. But, if this is the case, why has gold continued to rise in price?
Gold is rising in price because investors are worried about the debt situation and trade deficit in America. We’ve always known the U.S. Fed could expand and contract the money supply, and that was okay for many years. But, with the debt situation in the U.S. getting so out of hand, more dollars in an environment of rising debt presents a different picture.
It is now said that the U.S. government spends about $2 billion more a day than it takes in. If this fiscal situation doesn’t improve, the eventual outcome will likely be disastrous. And with so little gold around, the yellow metal could become very valuable. The smart money, who have been big gold buyers, know that.
China’s currency reserve in February climbed to $850 billion. China has now officially surpassed Japan as the world’s largest holder of foreign currencies. With about 75% of China’s foreign reserves in U.S. dollars and only 1% in gold bullion, should countries like China decide to lower their U.S. dollar reserves and increase their gold holdings; the price of gold bullion could literally go through the proverbial roof. Its public knowledge China has been encouraging its citizens to buy gold.
I, for one (or should I phrase it “as one of the few who”), believe gold prices are headed much higher. And, as I’ve written many times before (since 2001 to be exact), it’s still not too late to get a position in quality gold stocks.
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Tags: bull market, gold, gold bullion, gold stocks, U.S. dollar
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Michael bought his first stock when he was 17 years old. He quickly saw $2,000 of savings from summer jobs turn into $1,000. Determined not to lose money again on a stock, Michael started researching the market intensely, reading every book he could find on the topic and taking every course he could afford. It didn’t take long for Michael to start making money with stocks, and that led Michael to launch a newsletter on the stock market. Today, Michael only employs the top market analysts and editors. Some of our recommendations have posted gains in excess of 500%! Michael has authored and published over one thousand articles on investment and money management. Along the way to building Lombardi Publishing Corporation, now with over one million customers in 141 countries, Michael became an active investor in real estate, art, precious metals and various businesses. Readers of the daily Profit Confidential e-letter are offered the benefit of the expertise Michael has gained in these sectors. Michael believes in successful stock picking as an important wealth accumulation tool. Married with two children, Michael received his Chartered Financial Planner designation from the Financial Planners Standards Council of Canada and his MBA from the Graduate Business School, Heriot-Watt University, Edinburgh, Scotland.Follow Michael and the latest from Profit Confidential on Twitter
