Today's guest post is by Jeff Clark, editor for the gold bugs over at BIG GOLD. Leave us a comment and let us know what you think, has gold gone mainstream? Are we finally going to see the huge move in gold we keep hearing about?
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Are we there yet? Are we there yet? We gold bugs are like little kids on a trip to the zoo; we just can’t wait to get there. “There” being the elusive point in time when the gold mania (no, make that Gold Mania) hits and everyone and their cat will want to invest in the yellow metal. Which of course will propel its price to dizzying heights. $1,500… $2,000… $5,000 an ounce – the sky’s the limit. At least that’s how the theory goes.
But it’s not just a theory anymore: in the past year, we’ve been seeing unmistakable signs that gold indeed may be going mainstream.
For example, we have always said that when the Mania phase of this gold bull market really got underway, mobs would break down the doors of pawn shops and coin dealers in order to get their fill of the yellow metal.
While most pawn shops’ doors are still intact, that trend seems to have already begun. In August 2008, the U.S. Mint temporarily suspended sales of the one-ounce American Gold Eagle and in September of the American Buffalo coin, because it couldn’t keep up with customer demand.
In December, bullion dealers from Johannesburg to New York City were starting to run out of gold coins when investors caught in the economic downturn scrambled to get into safe-haven assets. The sudden “gold rush” was so extreme that large coin dealers posted disclaimers on their websites that their customers should expect delivery times of a month or more.
According to the World Gold Council, in the first quarter of 2009, “the biggest source of growth in demand for gold was investment. Identifiable investment demand reached 595.9 tonnes in Q1, up 248% from 171.3 tonnes in Q1 2008.”
At the same time, there is a counter-trend in motion: cash-strapped Americans are selling their scrap gold like there’s no tomorrow. All over the country, housewives throw Tupperware-style parties to sell their gold jewelry by the ounce, often at a steep discount to market price. And businesses like cash4gold.com – which, by the way, we do not recommend – are popping up like mushrooms after a summer rain.
But even Joe the Plumber may soon be enticed to turn from seller to buyer. Even if he never sets foot into a coin store, he’ll be able to get his share of gold – in easily affordable, and portable, slices. And he won’t have to look any further than his nearest airport, bus or railway station.
A German company has come up with a brand-new marketing concept for the yellow metal: shop for gold while you wait.
Asset management company TG-Gold-Super-Markt is planning to set up 500 ATMs at strategic locations all over Germany. The machines will distribute one-gram (0.0353 oz) mini-bars of gold, about the size and thickness of a child’s fingernail. The tiny gold pieces will cost 31 euros – around US$44 – which includes a hefty 30% markup to spot.
Thomas Geissler, chief executive of TG-Gold-Super-Markt, told Reuters that this new way of selling bullion “is an appetizer for a strategic investment in precious metals. Gold is an asset everyone should have, between 5 and 15 of your liquid assets in physical gold.”
Even though Geissler admitted that “In absolute numbers, the demand for physical gold is still tiny,” he sees a very bright future for the yellow metal. “[In] relative terms, the growth is explosive,” he noted, “inquiries have been doubling every six months.”
Are gold ATMs the go-to “gold mine” of the future? While we wouldn’t necessarily bet on it, Geissler is. And the fact that he thinks it a lucrative enough business to set them up is no doubt encouraging. It’s moves like these that we think we’ll see more of as gold becomes increasingly popular. The countdown for the moon shot is on.
By Jeff Clark, Editor, BIG GOLD
Read the BIG GOLD’s brand-new report here.
I've got to agree with Mark. This is kind of like the "Magazine Cover Index". A long time ago an old trader told me that when you get into a taxi in New York City and the driver starts giving you stock tips it's time to get out of the market. It does indeed look more like a top in gold rather than a buying opportunity.
Hi Adam,
thanks for your reply on trade triangles.I still need advice or suggestions on setting my stop loss when daily trade triangles appear (on forex)and in line with weekly triangles.this is because my stop loss targets has been hit severally only for market to move in the direction indicated by the triangles later.please help I'm a two weeks old member.
thanks
Kalu
Kalu,
What I do is to use the trade triangles not only the exit a position but also as my stop out point. When you are using the trade triangles as stops you are taking into consideration the volatility of the market. If a market very volatile, putting tight stops on is not going to help you. You will end up taking a lot of small losses which will quickly add up to be one big loss.
Using the trade triangles as you stops they adjust to the volatility and therefore you have a greater chance of staying in the trade.
I hope this helps.
Adam
Almost every point made in the above article seems to be pointing more to a top than a breakout in the making.
First, I have also followed the World Gold Council, for more than 20 years, and I have NEVER found them of any value in helping TIME the market. Otherwise, their statistics have always been interesting, but anectdotal.
Second, Gold ATM's across Germany???? NOW THAT SMACKS of a top, as no one would EVER be interested in this if gold prices were depressed.
Third, the markets have had fantastic opportunities to better the 3/08, $1061 (continuation chart) top, yet, almost a year and a half later, NO NET UPSIDE PROGRESS, while both gold and silver sentiment among futures traders is above 90%, making a strong push to new highs extremely unlikley in the near term.
I conclude that ALL THE STORIES, BULLISH TALK & REASONING has NOT correctly predicted the vastly awaiting surge in prices; HOWEVER, the technicals have guided the near term trading opportunities for those OBJECTIVE enough to trade what they see, rather than HOLD on a "HOPE"! I ALWAYS remember that in trading the word HOPE is perhaps the most dangerous of all rationalizations!
Hello
To many manipulations are being done on gold prices. The price of gold goes up and when it gets to high a lot of action is undertaken to bring the price down.
Germany wants to have the gold transported to them, also Dubai wants the same.
My opinion is that more people should buy gold, or gold stocks so the 1000$ barrier is breached once and for all and the manipulators don't have any chance to bring it down again and again.
best regards
Jan