Is Impending Inflation a Reason to Seek Precious Metal?

The US dollar remains down against the euro and other currencies as of the end of November. A direct response to this has been increasing activity to buy gold as a hedge. The question: Is this recent gold run a short term bet or is the weakening dollar going to be followed by inflation? The worst of both worlds.

The most prominent hedge funds have shorted long-term US treasuries and are longing oil – an inflationary red flag signal. Other notable hedgies are betting on higher interest rates and are doing so with constant maturity swaps and other financial tools which underline encroaching US inflation. Still others are betting on gold –  make that inflation – such as Paulson & Co’s 4+ billion dollar investment in gold related funds. 

Some critics have used 'hyperinflation' to define the future financial landscape if federal spending continues. And impending inflation could be catalyzed if congress passes the current administration’s proposed Consumer Financial Protection Act. Under the guise of addressing the causes of a global financial crisis, this bill would impose regulation on small and large business and bring free markets more and more under Washington’s control when the credit default swaps, and sub-prime load problems that have hampered financial markets were likely government sponsored policies to begin with. See WSJ 11/27/09, Lack of Candor and the AIG Bailout.

What is for sure is the demand for gold will continue to increase as a reserve currency as opposed to a commodity. Federal printing presses are working overtime to pour more money into the system in the form of bail outs, stimulus and war efforts.  Demand for gold will likely outpace supply.

New to our vaults, and we believe a safe haven for a declining dollar, the Australia 2009 $200 Koala High Relief 1oz Gold Proof Coin. Remember, there are no guarantees about whether or not a coin or any collectible, material thing or instrument in any asset class will increase in value and past performance of a coin’s return is Not indicative of future results.

Chinese Precious Metals Demand Likely to Influence International Supply

International demand for metal prices is always atop a short list of market forces working for, and sometimes against, a rare modern coins value. The recent announcement by the Chinese government urging citizens to buy silver and gold has been received by most to be a sure sign of a precious metals supply shortage. With a little math, it is clear there is a growing international demand for precious metals. Skeptics charge that strong demand will drive prices lower, a self full filling prophesy as investors begin to cash in. What is for certain is this relentless hype about precious metals will charge the investment community with more attention toward precious metals, just one of the market forces working for a coin collector’s bottom line.