Cairo - Another Excuse to Buy Gold
How anxious must gold advocates have been, to buy more gold on news of political unrest in Egypt?Oil I can understand, but gold, silver, platinum and palladium have all followed gold higher as well.It's obvious large buyers have made moves to take advantage of lower gold prices.It's as though they were just waiting for an excuse.
This morning a friend already called and asked what Cairo has to do with higher gold prices.If I came to you last week and said there is going to be political unrest in Cairo so buy gold now, admit it, an eyebrow would have been raised and you would have looked at me kind of cockeyed.As though political unrest in the Middle East is new news.We are at war with two countries, Iran is about to gain access to nuclear weapons and it's not until Cairo has its internet service disprupted that people's eyes widen and say, "now we got a problem."
I'm not saying their are not political undertones to the events taking place, I'm just saying political unrest in the Mid-East is nothing new except that today it has provided an excuse for buyers waiting in the wings to buy gold and sell stocks.
In my opinion, the only reason you buy more gold on news like this is to camouflage your true desire for more gold.If you buy when news about recovery is pervasive, you are essentially admitting you don't believe a word of it.Don't be surprised if in a few months we learn of a large central bank purchase of gold that occurred today.
Take China, for example.Last December we learned China's gold imports surreptitiously jumped five-fold in the first 10 months of 2010.Rest assured China's appetite for gold over the last two weeks has not changed just because the financial news channel says we're in recovery.When they see low prices, you can bet they are just waiting for the opportune moment to take advantage.Hence, Cairo.
Maybe this latest dip in gold prices has run its course and maybe not.But a few weeks of falling prices has nothing to do with the overall trend.If you believe budget deficits are petty and skyrocketing debt means nothing, then sell all your gold and precious metals.By the same token, don't panic out of stocks, real estate and bonds either.That's no good for the economy or the job situation.
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