Is Now the Time to Buy Gold?

Paul Dykewicz

The U.S. dollar’s 10% drop in value so far in 2017 and investor concerns that the stock market is running out of steam helped lift gold above $1,300 an ounce for the first time this year on Aug. 18, before the precious metal pulled back about $15 an ounce amid apparent profit-taking, said Rich Checkan, president of Rockville, Maryland-based Asset Strategies.

Investors interested in buying gold or especially gold coins should not be deterred by the market’s intraday retreat from $1,300, since the same causes that led the yellow metal to cross the $1,300 threshold remain intact, Checkan said. The U.S. dollar still is weakening and thereby losing purchasing power, while gold is an alternative asset that should hold its value or appreciate in response, he added.

A catalyst for the price of gold each August, September and October is the “love trade,” which Checkan said coincides with pre-holiday gift buying. Another factor pushing up the value of gold is the “fear trade,” which is driven by public threats against the United States from North Korea’s dictator, continuing terrorist acts and other geopolitical uncertainties, he added.

Plus, a weakened dollar reduces the price of U.S. goods to foreign buyers and aids American exports.

Combine those factors with a Gold/Silver Ratio indicator that signaled the price of gold and silver bottomed out in December 2015 and precious metals become an even more enticing investment, Checkan said.

“Our take is gold is the tortoise… your long-term, predictable wealth insurance,” Checkan said.

What had been countering the growing strength of gold was the upward trend of the stock market, Checkan said. With the market showing signs of pulling back based on recent trading patterns, gold could gain further lift, he added.

Exclusive  Daily Data Flow: Stocks Fall; Dollar Rises on Fed Easing Expectations; Earnings Season Looks Like Train Wreck

“The perfect storm is a really strong storm,” Checkan said.

Checkan, whose company sells precious metals, said now is a good time to buy before the value of the dollar shrinks further.

“A 10% drop in the U.S. dollar’s value is a clear sign of a trend toward further weakness,” Checkan said. “If you don’t have any, I suggest investors buy 1 ounce gold coins, from major mints, such as U.S. Eagle, U.S. Buffalo, Canadian Maple Leaf, Austrian Philharmonic and Australian Kangaroo.”

For investors interested in silver, Checkan suggested buying pre-1965 U.S. 90% silver coins, commonly referred to as “junk silver.” The coins minted in 1964 or earlier come in quarters, dimes and half dollars, he added.

“When they were minted, they were 90% silver content,” unlike the money people carry in their purses and wallets today, Checkan said. For such purchased, Checkan suggested taking delivery.

Investors in precious metals may acquire enough at some point to hold such assets in different geographic locations. Such assets provide “purchasing power” in a liquid form in the event of a financial crisis, Checkan added.

The U.S. dollar became the world’s reserve currency in 1944 under the Bretton Woods system. As a reserve currency, the U.S. dollar is used for settling trades worldwide.

“Every country that wants to do international trade must buy and sell U.S. dollars,” Checkan said.

The Bretton-Woods Agreement in 1944 involved delegates of 44 nations meeting and deciding to peg currencies to the price of gold, with the U.S. dollar becoming a reserve currency linked to the price of gold. In 1973, foreign governments allowed the value of currencies to float.

Exclusive  Eagle Eye Opener: Is Russia's Economic Slippage Putting Putin's Re-election at Risk; Global Market Tug-of-War Slightly Favors Bulls Today

————————————

Paul Dykewicz is the editorial director of Eagle Financial Publications, editor of StockInvestor.com and DividendInvestor, a columnist for Townhall and Townhall Finance, a commentator and the author of an inspirational book,Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a Foreword by legendary football coach Lou Holtz. Visit Paul’s website at www.holysmokesbook.com and follow him on Twitter @PaulDykewicz.

 

Like This Article?
Now Get a FREE Special Report:
3 Dividend Plays with Sky-High Returns

This newly-released report by a top-20 living economist details three investments that are your best bets for income and appreciation for the rest of the year and beyond.

Get Access to the Report, 100% FREE


img
previous article

Investment expert Dr. Mark Skousen shares why he is still fully invested in the current bull market.

PREMIUM SERVICES FOR INVESTORS

Dr. Mark Skousen

Named one of the "Top 20 Living Economists," Dr. Skousen publishes 5 different investment newsletter advisories, including the award-winning Forecasts & Strategies, which has beaten the market over the last 15 years.

Product Details

LEARN MORE HERE

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays. Bryan's four newsletter and trading services include:

Product Details

LEARN MORE HERE

Nicholas Vardy

A Stanford and Harvard Law graduate, Nicholas Vardy scours over 40 different global markets every day to uncover new profit opportunities for subscribers. His 3 advisories and trading services include:

Product Details

LEARN MORE HERE

Jim Woods

A 20-plus-year veteran of the markets, Jim Woods has varied experience as a broker, hedge fund trader, financial writer, author and newsletter editor.

Product Details

LEARN MORE HERE

Bob Carlson

In Bob's monthly newsletter, Retirement Watch, he provides independent, objective research covering all the financial issues of retirement and retirement planning. In addition, Bob serves as Chairman of the Board of Trustees of the Fairfax County (VA) Employees’ Retirement System, which has over $2.8 billion in assets.

Product Details

LEARN MORE HERE

Mike Turner

Mike’s financial, mathematical, computer science and engineering background serves as the foundation for his disciplined, rules-based approach to trading. Mike’s three services include:

Product Details

LEARN MORE HERE

DividendInvestor.com

Used by financial advisors and individual investors all over the world, DividendInvestor.com is the premier provider and one-stop shop for dividend information and research.

Product Details

Popular tools include our proprietary Dividend Calendar, Dividend Calculator, Dividend Score Card, and many more.

LEARN MORE HERE