...everything is good

Good morning and welcome to a Terrific Tuesday! Crosby, Stills, Nash & Young greet me this morning with their 1970 hit, “Our House.” When I hear this song, I always think of the quaint English thatched cottages and a cup of Earl Grey.

The New York Spot Prices began to rebound yesterday with Gold closing up $2.00 at $1,282.00, Silver was up $0.05 to $17.05, and Platinum was up $2.00 to close at $923. In overnight trading gold and silver slid back with gold dropping $3.00, silver $0.01; however platinum is up $2.00.

Don’t you just love it? Yesterday I showed you why the precious metals market will continue to be suppressed while the current stock rally, which is about to become the longest in history without a 3% correction, and 333 days without a 5% “draw-down,” and the dollar will continue to hold its strength against the other major currencies just got thrown out the window! Yesterday, precious metals began to rebound, stocks stalled, and the dollar lost ground! I suppose that this reversal of sorts just goes to show you that economics is like the weather. You can’t control it and you never know what is really going to happen.

This morning I’m finding article after article by top analysts, the best investment groups, and even the bullion banks are saying that precious metals are the best long-term store of value. A real reversal in thought. So why do we see the swings in price that we do? Well, first, there is obviously a difference between an exceptional store of value and short-term market fluctuations. Secondly, and from my perspective, more importantly, we are looking at precious metal value through the lens of the U.S. dollar which is solely based on the “full faith and credit” of the government, instead of backed by a store of value. To illustrate what I mean is if you go back to 1960, an average loaf of bread would cost you a quarter. Don’t believe me? Google it! Now, go to www.coinflation.com and see what a 1960 quarter is worth today. That’s right. $3.07. The price of a loaf of bread. The precious metal maintains its value. The dollar has not. So when we consider the value of a precious metal going up or down, shouldn’t we be using the precious metal as the benchmark and consider the dollar in fluctuation?

Anyway, it seems that everyone is anticipating a stock market correction in the near future. And will inflation create the correction or will it be the fallout to the correction? Bottom line is we all need diversification. And if you add precious metals to your portfolio, buy physical gold that you have in your possession. At this point, both allocated and unallocated PM accounts won’t do you much good if inflation hits hard. Both will pay you in inflated dollars. Not gold!

Well, I’ll let that be it for today. Go out there and make a difference! See ya’ll later!

*Disclaimer: Precious Metal Musings™ is written for entertainment and news purposes only and should not be used in making purchases and/or sales of precious metals.