WHAT IS GOING ON WITH THE PRICE OF GOLD?
By Burton S. Blumert*
December 15, 2005
Paul is our regular UPS man and he has been telling his wife that they should own some gold. Finally, with gold in the headlines, they made their decision and bought 5 ounces.
He picked up his order yesterday;
âSure, the minute I buy something, you can bet the price goes down,â? poor Paul mumbled as he wrote his check.
Iâd like to have an ounce of gold, or even a gram, for how many times Iâve heard that
wail from clients throughout the decades.
The corollary, that the price immediately spikes higher as soon as we sell something, is the other side of the coin (if youâll excuse the expression).
Few investors have escaped the agony of these experiences. Itâs as if there are little gods
who monitor such matters and they whack us every time we decide to buy or sell something.
The dramatic ups and downs of the price of gold in recent days has tested everybody.
Some new gold buyers are disheartened; others are in a state of shock. Even gold professionals have been emotionally wrung out by the schizophrenic price gyrations of the ancient yellow metal.
In case you missed it, hereâs a summary of the gold market over the past 2 weeks using prices from the London Metals Exchange as our source;
On Dec. 2, the price of gold punctured $500 per ounce price for the first time in about 20 years.
For the next 10 days the gold price spiked higher almost every trading day and
the inter-day price edged close to $540 per ounce.
Over the last few days gold has dropped sharply, and tomorrow, Thursday, Dec 15, the price could very well drop below $500. *
*This article was written on Wednesday night, December 14. The price touched $500.80 early Thursday morning in London.
Letâs consider these numbers in some prospective;
From its highs of 2 weeks ago gold plunged about 6Â½%.
I suspect that when we examine the history of gold prices in the years ahead, this recent spasm will register as a mere blip on the chart.
The following figures tell us the real story. Iâm using the price of gold for each January since the year 2000 to make my point:
January, 2000 $310 per ounce
January, 2001 275
January, 2002 295
January, 2003 375
January, 2004 425
January, 2005 431
January, 2006 ?? (I predict the price next month will be $500 +)
If you purchased gold recently and youâre worried, phone me and Iâll hold your hand.
If Iâm more worried than you, you can hold mine.
I can assure you of this;
When all other monies crumble into dust, the value of gold will endure.
Burt Blumert is a leading gold dealer (almost 50 years) in the San Francisco Bay Area. He is also my longtime companion. You can send him email at [email protected].
Special to Half Moon Bay Memories and El Granada Observer.
It was a hectic week for Gold.
The yellow metal was the lead story in the NY Times Business Section on Wednesday, November 19 and I was interviewed on the KGO 6 O’Clock News on Thursday.
The reason for all this hoopla?
The price of an ounce of gold went over $500 for the first time in over 20 years. (At the market close on Friday, Dec. 2, gold was trading at $504.50).
People are mystified by gold. They may revere ornaments produced by the Goldsmith (the gold wedding band is one of the most potent symbols in our culture), yet the notion of holding gold as an investment, or as part of one’s savings is clearly out of mainstream thinking.
It has been said that there are only 6 people in the world who understand Gold and that they have 7 different opinions. Well, let me try to “demystify” the subject, and, perhaps, persuade you to consider acquiring some beautiful gold coins.
First: Here are some of the “negatives” concerning gold ownership.
Gold doesn’t bring any return like a bond or stock. Also, storing gold could be dangerous and costly. The “crooks” love it and Safety Deposit Box fees at Banks are on the rise.
The “King” doesn’t like gold; he never has and never will. If you own a share of IBM stock, you are a patriot; own an ounce of gold and there is something wrong with you.
If someone wants to sell gold, it might prove difficult to find a buyer.
The government could confiscate gold as it was in 1933.
Some of the negative statements above are pure propaganda. Here are the immutable truths:
Gold and silver have been “money” in much of the world for almost 3000 years. By its nature, gold prevented the Kings and tyrants from increasing the supply of money whenever they wanted to. (As they do with paper).
It served as money in our own country from the beginning, the (1790s) through 1933 when it was demonetized. FDR’s first Executive Order in 1933 required Americans to bring their gold coins to the bank to exchange them for paper. They called it demonetization of gold, but it was outright theft.
Led by the US, the world has been off the god standard for about 75 years, yet every country retains gold as part of their national wealth.
Restrictions on Americans to hold gold ended in 1974.
If one has gold to sell, Iwould argue that there is nothing else they own that would be more liquid.
“Only Government can take commmodities as valuable as paper and ink and make them worthless.”
“When all the paper money is dust, gold will be of value.”
Yes, those quotes are pretty strong, but a prudent investor should own some gold.
Who knows, the next time KGO wants to interview me, it will be when gold exceeds $1000 per ounce.
Burt Blumert is a leading gold dealer (almost 50 years) in the San Francisco Bay Area. You can send him email at [email protected].
Gold price breaks $500 per ounce for the first time in 20 years– and this afternoon Ace-KGO-TV reporter David Louie interviewed Burt Blumert (my longtime companion) and gold expert at Camino Company, Burt’s Burlingame headquarters. Show airs during the 6 o’clock news on KGO-TV, an ABC affiliate in San Francisco.
Here’s some of my pix from the shoot: