What’s the “Fair Price” of Gold?

by Robert Williams, Publisher

The world’s been awaiting gold’s big push higher since Wall Street started unraveling over a year ago. Remember, gold is considered the foremost safe-haven investment during turbulent times because of its intrinsic value.

But since the Dow topped out in November 2007, gold has merely danced between $725/ounce and $1,000/ounce.

Last week, however, the yellow metal breached (and closed) above the $1,000/ounce level – thanks to the broad weakness in the U.S. dollar – for the first time in 18 months.

So that got me thinking. What’s a fair price for gold?

Consider this…

On the strength of the extraordinary inflation in the 1970s, gold traded for $800/ounce by 1980. At the time, the Dow sat at 800, which represented

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China turns it up another notch… now “concerned about the security” of U.S. investments… Chris Mayer tells the “story of today’s economy”… Mainstream celebrates latest home price index… our perceptive on the housing “recovery”… Three market sectors currently detached from reality… The truth emerges… why Ben Bernanke really bailed out Wall Street…

Here it comes, slowly but surely: “We sincerely hope the U.S. fiscal deficit will be reduced, year after year,” China’s Assistant Finance Minister Zhu Guangyao said overnight after talks with Treasury Secretary Geithner. Could he lay it out any more clearly than this? “The Chinese government is a responsible government, and first and foremost our responsibility is the Chinese people, so of course we are concerned about the security of the Chinese assets.”

The Chinese now own over $801 billion in U.S. debt, nearly double their holdings at the start of 2007 and by far the world’s largest

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The stock market seems to be rolling over. Investors read the news. It’s probably becoming clear to them that the economy is not going back to normal any time soon.

Yesterday, the Dow lost another 131 points. Another big day down and it will be in the 7,000-range. Oil sank too – down to $62. The dollar, bonds, and gold stayed about where they were.

Economists are still talking about an “exit strategy.” But in view of what is actually going on in the economy, they’ll probably want to stay on this highway a lot longer. This is the long road to ruin, of course. It may be fatal, but it is not – yet – unpopular. Broadly, what is happening is exactly what should be happening.

The stock market rally is getting old…and may have already peaked out. The consumer is running out of time, money and credit. He has no choice but to

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It will be a tragic event when US Dollar finally cracks – an event that will affect citizens across the world. But it will be especially dreadful for long-spoiled and unaware Americans. Your financial future is at stake. Do not be complacent.

You have probably heard claims like these for years. So, why should you be especially alarmed right now? Stay tuned! I will show you exactly why the buck is now in implosion mode.

Global finances have operated on faith in Monopoly money since Tricky Dick shut the international window for exchanging dollars for gold in 1971. We have since held the privilege of being the primary banker in a vast fiat game. But this Monopoly game is heading for a re-start and the US will no longer dominate the international issuance of money this next go around. And 99% of Americans won’t even know what hit them.

The only

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The Fed continues to preach that high unemployment will stymie any chance of (hyper) inflation taking hold and stealing our collective wealth.  Michael Ponto of Delta Global Advisors believes just the opposite.

It absolutely amazes me how sanguine the Fed, Treasury and Administration are about the prospects for subdued inflation. What they and many economists like to point to as the source of their optimism is the high rate of unemployment, which is currently 9.4%.  But the truth is that inflation actually causes higher rates of unemployment, while it is false to believe that inflation can be prevented by a labor slack in the economy.

To prove his point, Mr. Ponto dives into the unemployment and CPI numbers from 1971, when Nixon closed the gold window, until today.  The conclusion he comes to is grim.  He believes high unemployment speeds up the pace of inflation as there are fewer Joes in the

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The U.S. as a whole continues to dig itself deeper into debt, even though the composition of that debt is changing. The graph below (data from http://www.federalreserve.gov/releases/z1/current/default.htm) shows the total debt in the U.S. over time broken down by major sectors -- the Y axis is in billions of dollars.The final bar of the graph is for the end of the first quarter of 2009, while all the others are year-end figures, which is important to keep in mind since the differences between the other bars represents a full year, and the difference between the last two represents only three months.Total debt in the economy rose by 327.7 billion in the first quarter, but more than all of that ($359.9 billion) was due to increased federal debt (held by the public, excludes Social Security trust fund). The other sectors of the economy had ...

Fed’s Beige Book disappoints…Dollar rebounds on the day…Currencies come back on the night…RBNZ leaves rates unchanged…And Now… Today’s Pfennig!

Good day… And a Thunderin’ Thursday to you! It’s a Thunderin’ and lightenin’ here in St. Louis. It all began last night, went through the night, and still hangin’ round this mornin’! Yes, I’m into dropping “g’s” today! HA!

Well… We had “Turn Around Tuesday”, and that was fallowed by “Whipsawed Wednesday”! The euphoria of the dollar bears, turned quickly yesterday, with the dollar bouncing back… I’ll tell you this dollar has more lives than a cat! But that’s OK… I certainly don’t want to see a dollar collapse, as some have called for… I just want to see it at a “fair” level, given the fundamentals of exploding deficit spending… That seems fair, eh? Trends… Weak dollar, strong dollar, alternating throughout time… Well, at least since Nixon closed the Gold window in

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It’s the Ultimate Fighting Event - Worldwide Economic Mud Wrestling! See it now! First, the Honey Hun … German Chancellor Angela Merkel took on a whole pack of central bankers and economists, charging that they were going to make the situation worse by spending money they didn’t have… and causing inflation.

Then, historian Niall Ferguson - Professor Punchy - took a jab at the meddlers in the pages of the Financial Times. His point was simple enough - that the feds were spending trillions of dollars without really knowing what they were doing. If they borrow money to stimulate the economy they are just taking money out of the private economy and diverting it to public spending. There’s no gain in that, he said.

Watch out Niall! The Nobel Knucklehead - economist Paul Krugman - hit back.

We’ll return to this grapplefest. But first, let’s take a look at what is happening

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Currencies get a tourniquet… BOE And ECB leave rates unchanged…Political uncertainty in the U.K…Aussie dollar to rally further? And Now… Today’s Pfennig!

Good day… And a Happy Friday to one and all! A Fantastico Friday, as we all will be heading to the Ballpark tonight to watch my beloved Cardinals! This should be a fun time by all! It’s also a Jobs Jamboree Friday, and we’re about to witness something that hasn’t been seen in 25 years… A “published by the BLS” Unemployment Rate of 9%!

OK… You know me… I think the (Bureau of Labor Statistics) BLS

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Our experts have cranked it up to high gear and have dug into some of the most controversial topics Investment U has covered recently. Like investing in gold.

Gold has been an incredibly hot topic over the past few months. On one side, it looks cheap from an inflationary perspective, and on the other, overpriced. Our own Louis Basenese even suggesting that we should consider shorting gold. The debate has ranged on our message boards pro and con…

But regardless of its short-term movement, we recommend holding 5% of any portfolio in precious metals - like gold. So what is the best way to accomplish this? We found a number of ways to do just that.

The Best Ways for Investing in Gold

Rick Rule, Chairman of Global Resource Investments, makes a compelling argument that gold isn’t a commodity in as much as it’s insurance. “Gold is disaster insurance. You

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