Gold: Russia and Mexico are Buying

On the one hand, we've got hedge funds and some nervous investors afraid that gold and silver have had their time in the sun--and selling.  On the other hand, central banks continue to buy.  GoldCore.com reports that Russia and Mexico are buying in a big way.

"While gold demand from the western investors and store of wealth buyers has fallen in recent months, central bank demand continues to be very robust and this is providing strong support to gold above the $1,600/oz level.  IMF data released overnight shows that Mexico added 16.8 metric tons of gold valued at about $906.4 million to its reserves in March."  Russia continued to diversify its foreign exchange reserves and increased its gold reserves by about 16.5 tons according to a statement by its central bank on April 20."

Who's right?  Who knows?  Maybe both are.  If so, my guess is that the sellers are right in the short term.  If Europe implodes, who knows what kind of rush to liquidity that might cause?  In the long term though, that almost certainly means vastly more QE (give it a different name if you care to), and we know what THAT does to prices of everything.

Finally, if this next QE is the one where our monetary masters lose control, it's hard to imagine a price too high for gold--or too low for fiat currency.

Richard Maybury: The Easiest Investment Call in the World

Richard Maybury just did another great interview with The Gold Report.  I am sure you want to read the whole thing, but I couldn't pass on this one quote.

"TGR: If war and hyperinflation are the inevitable future, how can investors survive or maybe even thrive during a time like this . . .
RM: Well, I wouldn't put $100 under the mattress, at least not for very long, because it will soon become worthless. But commodities, stocks of raw materials firms, gold and silver and platinum coins have value. Generally, I try to see the world in terms of two kinds of investments: dollars and non-dollars. You definitely want non-dollars, things that do not have their value tied to the value of the dollar. An example of a dollar asset is something like a bond or bank CD. Their values are tied directly to the value of the dollar. If the dollar falls, then their values fall.
Gold is a non-dollar asset. When the dollar falls, usually gold rises. The same is true with silver and oil. All of these things have values that are not tied to the dollar. My advice is to invest in non-dollar assets. Gold would be at the top of the list, silver and platinum and then oil."

I spent a fair amount of time thinking about gold silver. When push comes to shove though I'm not really a goldbug. Honestly, I think it's much easier to save and transact in dollars.

But Richard hit the nail on the head here. Now is not the time (if there ever was one) to store value in dollars. So many actions that our government (and governments around the world) are taking seem to indicate with crystal clarity:

• They can never repay their debts.
• They don't intend to pay their debts (at least not in good money).
• They will bail out their bankers at any cost.
• They will continue to fund the unfundable at the cost of destroying our currency.

So to me it seems clear. Have some dollars to buy your groceries (might want some extra groceries on hand as well), pay your mortgage, and even next year's college tuition for the kids. But for the value you're saving for years from now, you'll probably want some protection from the tender mercies of our Federal Reserve.