The REALLY big picture…

March 19, 2008 in Gold and Silver, Money Thoughts | No comments

I know, I know… You bought gold yesterday before the FED cut rates by ONLY .75%. Gold and silver are down by nearly 5% and you are probably worried that there will be a “run” on people selling their gold. All I can say is to take a step back at the BIG picture.

Here is what no one is reading about today.

“The market overlooked other data in the report that showed crude oil stockpiles grew by a much smaller than expected 200,000 barrels last week. Gasoline inventories fell by 3.5 million barrels, when analysts had expected a small increase, and supplies of distillates, which include heating oil and diesel fuel, fell by 2.9 million barrels, more than double the expected amount.

Greed has taken hold of a lot of amateur investors who are running to the gold shops to SELL their gold for what they think is a great move at this point. Honestly, these people will be kicking themselves for not seeing the “BIG PICTURE” by September when Gold will have touched $1500 an ounce and will still be climbing.

In one report, wait lines at the gold shops were as long as 4 hours to sell GOLD. People who were interviewed claimed that they needed to sell to pay taxes and the gas bill. Yikes… Wise investors are still buying at this low price today knowing GOLD IS ON SALE.

Don’t regret, and don’t panic. Be smart, take a look at the big picture as to why gold is so high today and think about the reasons it’s where it at. Those factors have not changed:

  1. Oil prices are still high, and although consumption is down, so is supply. (This means oil will probably not drop much more)
  2. Inflation is inevitable. Rate cuts cause inflation, yesterday was a HUGE cut. Rumor has it that they may still have to make more cuts.
  3. Other countries are starting to slowly liquidate their US Dollar supplies into GOLD and Silver.
  4. Our housing crisis is continuing with a vengeance, and the end is no where near in site.
  5. Our Dollar is reaching new lows day by day. Yesterday was just a really short spike for the dollar because the cut wasn’t as big.
  6. Oil supplying countries have lost so much faith in the US dollar, they are now selling oil for other currencies. This means they are putting their assets elsewhere. (gold)

I have no market thoughts for today. I am taking a wait and see approach and letting things settle to be able to get a bigger picture of where things are going.