Central banks to be net gold buyers this year

Discussion in 'Commodity Futures' started by DrPepper, Nov 16, 2009.

  1. I was at a party over the weekend and a friend brought up my favorite topic-gold. He is retired and lives off of his pension and investments. He has a financial planner who manages his portfolio, which is diversified into the typical conservative stock and bond percentages. He follows the market, but does not do any investing himself and does not know anything about fundamental or technical analysis. He has read about the US government printing so many dollars and was angry about that causing the value of his dollars to erode. His question for me was how to protect the value of his money. One of my suggestions was to buy gold and silver.

    His reflex response was " I'm not going to buy gold at an all time high". I suggested that silver was actually a better value right now since the gold to silver ratio is about 60:1. However, he thought $17+ silver was also too high.

    I considered him to be fairly knowledgable since he at least knew that the value of the US dollar was declining and that he needs to protect himself. However, the bottom line is that he is going to do nothing.

    Most people think the stock market is rising, so everything is okay. However, smart investors and central banks know that a crisis is developing, so they are putting their money into gold. They know that gold is at an all-time high, but they see the writing on the wall--the massive printing of US dollars will weaken the dollar's value, cause hyperinflation and result in much higher commodity prices, including gold and silver.

    When the masses (including my friend above) finally realize that their dollars are going to be worth next to nothing, they are going to get scared and try to buy all the gold and silver they can, even though the price of gold will have slowly risen to $1500-2000 an ounce and silver to $25-30 per ounce. Smart investors will already be positioned for the explosion in price that will occur when the public finally understands what is happening and starts to panic.

  2. You are so right, you couldn't be more right.

    There is so much I could write to explain how central banks of the western countries work.

    But who exactly would say thanks for info. :cool:
  3. I would appreciate any insight into the central banks and gold market. Thanks.