The Case For Gold Right Now

March 12, 2014

With special thanks to the St. Louis Federal Reserve and its FRED charting software.
Published with permission. These charts update automatically.

This collection of charts is for those who do not like a lot of verbiage to justify an investment decision -- just the facts. Two primary themes drive the specific chart selections presented here:

First, it is clear that none of the factors which caused the financial crisis of 2008 have been addressed in any sustainable fashion by those charged with setting economic policy. Explosions in both the monetary base and reserve bank credit show they have simply been 'papered-over' - a far-cry from a lasting solution. In fact, one could argue (and many have) that such policies may one day fuel a second tier to the crisis even more damaging than the first.

Second, gold from a price perspective has moved markedly lower against this backdrop - a disconnect not lost on buyers in the East as well as prudent, asset-preservation minded investors here. Even as this is written, gold has already advanced 15% off of its 2013 lows. We invite you to study this group of customized charts and come to your own conclusions.

A key feature to this issue of Review & Outlook is that the charts will continue to update automatically, so we encourage you to bookmark this page and return to it regularly to monitor any developments. Once you have made the decision to proceed with your first or next gold purchase, we hope that you will contact us to address your portfolio needs.

London Gold versus the Standard & Poor's 500 Index
Shows a possible overvaluation in stocks and undervaluation in gold 
 

Annualized Gold Returns
Shows yearly gain or loss from 2000 to present
 

London Gold versus Monetary Base
Shows gold tracking monetary base, divergence in 2013
 

London Gold Last Twelve Months
Shows price updated daily
 

London Gold versus Reserve Bank Credit
Shows the effects of quantitative easing on the gold price, divergence since 2013
 

London Gold Annual Rate of Return Over Same Month Previous Year
 

London Gold Price 1968 to present (Log Scale)
Shows gold's current secular bull market in relative scale to the 1970s bull market 
 

Courtesy of http://www.usagold.com/

 

Michael J. Kosares has over 40 years’ experience in the gold business. He is the founder and executive director of USAGOLD (both the website and gold brokerage service), the author of three books on the gold market, and the editor of "News, Commentary & Analysis," the firm's client letter. He has written numerous magazine and internet essays and is well-known for his ongoing commentary on the gold market and its economic, political and financial underpinnings. Visit his website at www.usagold.com.

In 1933 President Franklin Roosevelt signed Executive Order 6102 which outlawed U.S. citizens from hoarding gold.

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