When is the Best Time to Buy Gold?

By Jeff Clark, Editor, BIG GOLD

I bet you don’t own enough gold.

Before you tell me I’m wrong, let me ask it this way…

• If inflation returns, or even hyperinflation…
• If the economic crisis persists and gets worse…
• If uncertainty and fear continue, and chaos and rioting begin…
• If stock markets languish or suffer another meltdown…
• If the recovery spending of the world’s governments proves futile…
• If government interference in the economy continues to increase…
• If the value of the U.S. dollar takes a major fall…
• If world recovery from the current recession/depression takes years…
• If you’re still wondering whether you have enough “safe” money…

…would you feel you own enough gold?

If all those things come to pass, I suspect many of us, including myself, would wish we had a few extra gold coins or bars stashed away.

So let’s assume you answered “No” to my question and need to add some ounces to your collection… is now a good time to buy?

The Best Time to Buy Gold?

Before glancing at the chart below, if you had to pick the month with the weakest average gold price, which would you select?

In our current 8-year bull market, June has seen the lowest return for gold. In other words, it’s been, on average, one of the best times to buy.

How does this compare to the bull market of the 1970s?

In the last great bull market, summer also was a good time to buy gold (although April was even better.)

What about gold stocks?

Since 2001, July and October have been the weakest months for gold stocks, as measured by the AMEX Gold Bugs Index, and the best times to buy.

However, keep in mind that these are price tendencies and not certainties. There were Junes when gold was up, and some Julys when gold stocks were up. Meaning, avoid using this chart for trading purposes or in anticipation of an immediate gain. Instead, use it to prepare for possible gold price weakness ahead. And if the weakness shows up, treat it as a buying opportunity and add to your holdings to position yourself for the next leg up in the bull market. Consider that this summer could be the last chance to buy gold for three figures.

Don’t lose sight of where we are at this point in the recession - in an intermission in the bad economic news. When it becomes apparent that the good ole days aren’t coming back, sentiment - and markets - could move rapidly. And gold is one of the best forms of capital that can protect you in a financial Armageddon. That gold was up in 2008 is a reminder of its protective power.

How much gold should you have? Continue to accumulate physical gold until you can honestly say you don’t care how many dollars Ben Bernanke prints.

Having physical gold in your possession is always a good idea in times of economic turmoil - there is no “uncertainty hedge” like it. But to actually make money, you should also look at premium gold stocks. Our current favorite has been so consistently successful that we call it “48 Karat Gold.” Click here to learn more.

It’s frustrating to me that the chart below shows we are in the longest recession since the Great Depression.

After all, it’s only been about 8 months since the moron economists pulled their collective heads out into the light of day to admit what the rest of us had known for some time - YES, we were in a recession long before the “crisis” became obvious.

But here it is.

Please don’t get your investment advice from the same clowns who couldn’t figure out we were in a recession until 10 months later. Maybe their undeserved FAT paychecks got in the way of their eyesight.

Who knows what their undeserved fat paychecks will get in the way of next time; you don’t want it to be to your peril.

Listen to people who have been calling it correctly for many years now.. in fact, they forecast this whole debacle.

Learn more here.

The Gold Storage Solution: Switzerland

A BIG GOLD Special Report

At Casey Research, our task is to accurately forecast trends, do it early, and help investors profit from what we’ve found. Without claiming infallibility, we’ve gotten it right more often than not, and by distinctly profitable margins.

But research to anticipate what to expect is the easy part. It’s the when-to-expect-it-to-happen that’s tricky, and waiting for a predicted trend change or crisis sometimes can test our confidence. The crisis we warned about years ago is now here, and its arrival has altered many of the rules for investing.

If you’re reading this report, you probably followed our earlier advice and have accumulated a nice-size crisis insurance policy in the form of physical gold. Now you need to decide what to do with that stash of Midas cash. It may have been born in a corner of your sock drawer, but perhaps now it’s stress-testing an attic rafter. Unlike gold ETFs and mining shares resting digitally in your brokerage account, physical gold brings with it questions of space and place: how and where to store it.

As to the how, the most common methods for storing physical gold will be obvious to most investors: concealment, a home safe, or a bank safe deposit box. In BIG GOLD, we recommended using a home safe because 1) it keeps the gold under your immediate control, and 2) it eliminates any risk that storage at a bank carries: emergencies don’t schedule themselves bankers’ hours; if a “bank holiday” occurs, access to a safe deposit box will be lost when it’s needed most; and a court can order the seizure of its contents, or the IRS can freeze your assets.

So that’s it? A one-size-fits-all storage solution?

No, not quite.

As your gold holdings grow, or if you already own sizable weight or are considering a large purchase, keeping all your golden eggs in one steel-and-combination-lock basket may not be the right solution. As we encourage above, having some gold in your immediate control assures that you can see yourself and your family through any calamity. Now ask yourself: can I keep a secret and not discuss it with anyone? Loose lips can only lead to a late-night, ski-mask-clad, armed visitation. How about the “security” company that installed the safe - how tight are their lips?

Further, keeping large amounts of gold in your possession exposes you to a latent threat: political risk. Or in ’round the water cooler jargon, a “government gold grab.”

Think it won’t happen in the good ol’ U.S. of A.? Consider the surge of government pushiness over just the past six months. The U.S. government has usurped the free market by subsidizing entire industries and embarking on mega-dollar “stimulus” spending schemes, committing trillions to its efforts - money it doesn’t have and must borrow or print. With tax receipts falling off and government debt exploding, the government’s hunt for revenue could lead to increasingly desperate measures.

We’ve seen the 1933 black-and-white version of this script, in which the plot develops into a presidential diktat forcing delivery (confiscation) of gold owned by private citizens to the government in exchange for compensation at the price it finds most convenient. Will the temptation again prove too great? We don’t know. What we do know is that once the credits roll, it’s too late to start preparing.

So the final storage question must be confronted: where should your gold be stored?

Sending Out an SOS: Swiss Offshore Storage

One fundamental rule of investing that hasn’t changed is diversification, and the principle applies to the locations you choose for storing gold bullion. Follow the principle where it leads, and you find yourself thinking about “internationalizing” your gold by holding some of it in another country. But it should be the right country.

So exactly where is where?

The answer is the safest country with the most secure facilities: Switzerland. Yes, still Switzerland.

For our money, er, gold, we can’t think of a country with a stronger legacy of respect for private property. The country traces its formation back to 1291, and the first Swiss Confederation was formed in 1353. Complete independence came in 1648, when the Treaty of Westphalia recognized the final separation of Switzerland from the Habsburg Empire. Over the 361 years following the treaty, Switzerland has maintained its neutrality and shunned foreign military entanglements. Now that’s shock and awe.

The country’s domestic politics are characterized by stable, non-intrusive coalition governments. Such habitual civility, together with Switzerland’s long tradition of respect for individual privacy, has kept this small, largely alpine country atop the list of the world’s most trusted safe havens.

The Franc: Swiss Hit or Swiss Miss

The global financial and economic crisis has recently found its way into Eastern Europe, and the troubles brewing there center on the Swiss franc. The apparently dire situation led economist Arthur P. Schmidt to predict that Eastern Europe’s difficulties would pour over disastrously into Switzerland. His predictions grabbed the headlines and a bit of attention.

So, in keeping with the Casey, “Intensely Curious, Focused on Facts,” we dug behind the headlines. Here’s the big nothing we found.

Engaging in a carry-trade-like gamble, individuals and businesses in Poland, Ukraine, Croatia, Hungary, Latvia, and Belarus borrowed heavily in Swiss francs, attracted by low interest rates. They crossed their fingers for trouble-free repayment as, for a while, their currencies strengthened against the franc. But that strength didn’t last. The global economic slowdown hit Eastern Europe hard, and their currencies fell sharply against the Swiss franc, turning mortgages and other franc-denominated debts into horrible burdens. Said fingers are now doing a lot of pointing at who’s to blame. The size of the problem, according to Schmidt, is 230 billion Swiss francs (US$200 billion), and the difficulty of collecting on the loans supposedly threatens Swiss banks with huge losses that could bankrupt the country. Schmidt refers to Iceland’s recent national bankruptcy as a model.

We don’t blame him for trying, but the report incorrectly assumes that all the Swiss franc loans to Eastern Europe originated at Swiss banks. They didn’t. In fact, it’s Austria’s banks that have the greatest exposure to Eastern Europe. The day after the headlines, Credit Suisse released a report citing the latest figures from the Swiss National Bank that show Swiss bank loans to Eastern Europe totaled just SF33 billion (US$28.7B), or 6% of Switzerland’s GDP. In contrast, Iceland’s banks had lent over 1,000% of GDP.

Our conclusion: we see no evidence of an impending banking crisis or national bankruptcy in Switzerland. Heidi is safe.

[To read the full report and learn all about Swiss specialist depositories, click here.]

Short selling rules are likely to change soon.

Whether or not the government will decide to enforce them is another question; whether or not they will apply to the “friends” of government, like Goldman Sachs (sometimes spelled “Sucks”) is yet another question.

(Summer of 2008 saw restrictions on shorting the shares of financial institutions for a specified time period; Goldman Sachs was exempt from the temporary restrictions.)

(Similarly, the “uptick” rule has come and gone; and rules preventing “naked” short selling [short selling without borrowing the stock] was allowed if you were a big shot, but the little guy was prevented from profiting by that handy tactic.)

My friends at Casey Research have decided to make it easy to learn about short selling by providing an e-book on the topic.

The e-book is free for subscribers to the Casey Report.

The Casey Report is not only inexpensive, but you can get a risk free trial offer here.

I think currency debasement is much like the frog getting slowly cooked in the kettle, you just don’t seem to notice the effects.

My thanks to Ed Steer over at Casey’s Daily Resource Plus for the following two pictures of a 1929 postcard.

Look what a few dollars would buy in car parts and labor in 1929:

Now look at your latest auto repair bill.

Back when I was wrenching on our own vehicles 30 years ago, (50 years after this postcard), $25 wouldn’t buy one head gasket and it took about $300 to overhaul a transmission that wasn’t seriously broken.

Now, $25 won’t hardly buy you an oil change.

Look at the cost of sending a postcard:

Today it costs 28 times that!

Currency devaluation kills a retirement nest egg or any other savings, such as a child’s college fund. I have never seen any figures showing investment returns coming even close to the annual increases in college tuition costs.

The current government approach to “fixing” the financial crisis, I feel, is going to end badly. The price we avoid paying today will pale in comparison to the price paid by us and our children, grandchildren, etc in future.

The Federal Reserve is supposed to protect our money. They, with the help of Uncle Sam, are destroying it. The only alternative is to invest in real money.

Dennis Gartman of the infamous Gartman Letter (one of the most expensive investment newsletters out there) has gone long gold again, not that long after saying he was staying away for a while.

Mr. Gartman’s trading in gold reminds me of the action of a ping pong ball. I’m not sure he ever makes any money at it, usually getting stopped out within a day or so it seems.

Just the other day Dennis made a comment that seemed to admit belief in government manipulation of the gold market; in fact, I’m not sure how else the comment could be taken. Yet, only a day later he backpeddled and stated that he did NOT intend to imply any such thing.

Dennis is too smart to misspeak like that; and they say he is well connected. (Then why doesn’t he make more money on his trades?)

IMHO, if you want to make money in the gold market, learn more here.

Why Healthcare Is Killing America

by Bud Conrad, Editor, The Casey Report
Healthcare is the biggest segment of our economy. In the debate over who should pay for what or, increasingly, for whom, most people don’t stop to understand just how large a portion of our society’s money is dedicated to healthcare.

For some perspective, as a share of GDP, the U.S. spends about twice that of other advanced nations. This is an important reason why the U.S. is increasingly uncompetitive in global manufacturing. It is, for instance, the most important factor (besides poor management) that General Motors and Chrysler are going bankrupt.

Going forward, the situation is guaranteed to get worse. The Obama administration is committed to major reform to cover the 40 million people not now covered by insurance. Once everyone has insurance, with many paying nothing at all for coverage, patients won’t care what it costs, and the system will quickly spin out of control.

And it’s already out of control. I recently spent one day in the hospital due to a broken arm, which cost on the order of $100,000. Remarkably, that eye-opening amount still doesn’t include the ambulance, the doctors, the x-rays, the CT scans, or the anesthesiologist. I’m still getting bills. The system is far more broken than is widely understood, unless you have had a recent bad experience.

Projections for healthcare are particularly problematic because of the demographics of so many people born just after World War II. Soon, there will be less than three people in the workforce for each retired person. That will result in huge taxes on the few workers to supply the expensive end-of-life medical care for the retirees (and it is in the latter years where medical expenses really begin to rack up).

This bubble was predicted and a government trust fund was set up. Unfortunately, as is typically the case, the government couldn’t keep its hands off the money, and so it has already been spent. The outlook is not good. In fact, in just over 10 years from now - by 2020 - the demands on the government for Social Security and Medicare will get so high that they cannot be met. And it gets worse from there.

It’s a safe bet, based on history, that the government will once again try to print its way out of the problem - but all that will do is further destroy the dollar and drive interest rates up even more. Just to be clear, this is not just about a government program gone awry, but as much or even more so a demographic problem - which makes it all the more intractable.

Don’t wait to be saved by the government; take your life - and your asset protection - in your own hands. For example, by playing one of the most obvious and inevitable trends and Bud Conrad’s favorite investment for 2009. Click here to read the full report.

Former President (41) George H.W. Bush intended to mark his 85th birthday in the same way he marked 75 and 80; with a tandem parachute jump. The weather in Maine may not cooperate resulting in a delay until tomorrow.

It is reported that the tandem jump would be with the Army Golden Knights Parachute Team.

It’s nice to know that despite the ec0nomic troubles in our nation and the record trillion dollar deficits we can still afford to add this additional perk to the modest pension and secret service costs for the former one term President.

Unless, of course, he pays the expenses out of his own pocket. Somehow I doubt that.

Happy Birthday, Mr. President, I hope you enjoy the jump at our expense (and feel free to correct me if I’m wrong about that part). Those of us who cannot afford such luxuries will covet your opportunities.

Tupperware and ATMs- Gold Goes Mainstream

By Jeff Clark, Editor, BIG GOLD

Are we there yet? Are we there yet? We gold bugs are like little kids on a trip to the zoo; we just can’t wait to get there. “There” being the elusive point in time when the gold mania (no, make that Gold Mania) hits and everyone and their cat will want to invest in the yellow metal. Which of course will propel its price to dizzying heights. $1,500… $2,000… $5,000 an ounce - the sky’s the limit. At least that’s how the theory goes.

But it’s not just a theory anymore: in the past year, we’ve been seeing unmistakable signs that gold indeed may be going mainstream.

For example, we have always said that when the Mania phase of this gold bull market really got underway, mobs would break down the doors of pawn shops and coin dealers in order to get their fill of the yellow metal.

While most pawn shops’ doors are still intact, that trend seems to have already begun. In August 2008, the U.S. Mint temporarily suspended sales of the one-ounce American Gold Eagle and in September of the American Buffalo coin, because it couldn’t keep up with customer demand.

In December, bullion dealers from Johannesburg to New York City were starting to run out of gold coins when investors caught in the economic downturn scrambled to get into safe-haven assets. The sudden “gold rush” was so extreme that large coin dealers posted disclaimers on their websites that their customers should expect delivery times of a month or more.

According to the World Gold Council, in the first quarter of 2009, “the biggest source of growth in demand for gold was investment. Identifiable investment demand reached 595.9 tonnes in Q1, up 248% from 171.3 tonnes in Q1 2008.”

At the same time, there is a counter-trend in motion: cash-strapped Americans are selling their scrap gold like there’s no tomorrow. All over the country, housewives throw Tupperware-style parties to sell their gold jewelry by the ounce, often at a steep discount to market price. And businesses like cash4gold.com - which, by the way, we do not recommend - are popping up like mushrooms after a summer rain.

But even Joe the Plumber may soon be enticed to turn from seller to buyer. Even if he never sets foot into a coin store, he’ll be able to get his share of gold - in easily affordable, and portable, slices. And he won’t have to look any further than his nearest airport, bus or railway station.

A German company has come up with a brand-new marketing concept for the yellow metal: shop for gold while you wait.

Asset management company TG-Gold-Super-Markt is planning to set up 500 ATMs at strategic locations all over Germany. The machines will distribute one-gram (0.0353 oz) mini-bars of gold, about the size and thickness of a child’s fingernail. The tiny gold pieces will cost 31 euros - around US$44 - which includes a hefty 30% markup to spot.

Thomas Geissler, chief executive of TG-Gold-Super-Markt, told Reuters that this new way of selling bullion “is an appetizer for a strategic investment in precious metals. Gold is an asset everyone should have, between 5 and 15 of your liquid assets in physical gold.”

Even though Geissler admitted that “In absolute numbers, the demand for physical gold is still tiny,” he sees a very bright future for the yellow metal. “[In] relative terms, the growth is explosive,” he noted, “inquiries have been doubling every six months.”

Are gold ATMs the go-to “gold mine” of the future? While we wouldn’t necessarily bet on it, Geissler is. And the fact that he thinks it a lucrative enough business to set them up is no doubt encouraging. It’s moves like these that we think we’ll see more of as gold becomes increasingly popular. The countdown for the moon shot is on.

As you may know, the BIG GOLD editors go even further than Thomas Geissler: we recommend that you hold up to 33% of your overall portfolio in physical gold, 33% in cash, and 33% in select investments. One of those investments may be one you’ve never heard of before. Yet it has given our subscribers 54% returns in 2008 - at the same time the common stock market was plummeting. Read our brand-new report here.

Jim Rogers was interviewed in IndiaTimes about his outlook on stock markets, commodities and countries to invest or avoid.

On stocks, Rogers says he won’t short markets because even poor stock markets can go to unheard of heights when price in currencies that are becoming more worthless. He feels a currency crisis is within the near term horizon (a year or two) and likely will come from someplace we aren’t paying attention to at the time.

The last stocks Jim Roger bought were Chinese stocks last fall when there were exceptional values there.

As for India itself, Rogers takes a wait and see approach to the p0liticians promising changes - he’s been hearing their promises for 40 years now. He prefers Sri Lanka now that their 26 year war appears to be over.

Water resource stocks he feels are the way to invest in both India and China as both countries have horrible water problem.

Regarding currencies, even though a U.S. Citizen (living in Singapore), Rogers has almost no U.S. dollars in his portfolio.

I agree with the commodity guru when he says that the Central Banks will not be able to “mop up the excess liquidity” when the time comes to avoid rampant inflation and currency devaluation. Trying to do so would squash any economic recovery and inflict too much pain on a populace unwilling to bear it.

The place to be, Rogers has said over and over, is farming. With more and more land turning to the production of crude oil alternatives, investing in food and cotton is likely to be a more profitable play.

And since farmers cannot get loans for seed and fertilizer, any spell of bad weather could result in terrible food shortages.

Unfortunately, to be a farmer in my neck of the woods (MidWest), you need the capital backing to absorb the purchase price of land at about $6000 per acre.

Investing Jim Rogers way isn’t necessarily easy. He doesn’t give us individual stock or ETF picks.

What I do is follow investment newsletters that seem to share the same philosophy as Jim Rogers and follow their investment advice.

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