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This is not the time to sell gold bullion - it is the time to buy.

May 10, 2011 – The way to win in gold bullion investment is obvious – buy in the dips and sell at the peaks. That’s what big money thought is was doing last week, but gold was in fact no where near its peak. The bubble has yet to form, contrary to popular opinion. That can occur only when market participation exceed its support level – and we are far, far from that.

So gold’s pullback from its full assault on $1600 was just to regroup and join forces with a growing number of central banks that are buying up record quantities of the metal. The window of opportunity to cash in on sub-$1500 prices has probably already passed, but the price is still a bargain, although no one can say for sure how long it will last.

Sentiment is growing in all corners that the state of our economy doesn’t match the steady stream of optimistic reports. “We have some particularly poor-quality economic reporting right now … Yes, there has been some upside bouncing in certain areas, but it's largely tied to short- lived stimulus factors,” ShadowStat’s editor John Williams said in a Gold Report interview.

That has been made apparent in the housing market, which is now expected to continue deteriorating for at least another year. The market’s temporary “improvements, spurred by federal programs that gave buyers up to $8,000 in tax credits, proved fleeting. Sales collapsed when the credits expired last summer, and prices in many markets have been falling ever since,” said Nick Timiraos and Dawn Wotapka in the Wall Street Journal.

“When all the dust settles, I think you'll see that the economy did start to turn down again in latter 2010. Somewhere in that timeframe, they'll start counting the second or next leg of a multiple-dip recession,” Williams said. “I don't think you have until 2012 before this gets out of control and there's hyperinflation … we're seeing all sorts of things happening now that are accelerating the inflation process.

The market fundamentals will not let the price of gold languish at today’s levels for very long. This is clearly not the time to sell gold bullion, it is the time to buy.

Daily Updates Archive

Jonathan Monroe

Senior Staff Writer -

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