Still a Gold Bug

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“It looks like there are finally some signs of recovery in the US,” said more than one person we talked to last night.

The occasion was a cocktail party…held on the grounds of a stately chateau. The summer social season is underway in Poitou. We are attending dinners, plays, cocktail receptions, barbecues and weddings.

Last night, waiters in tuxedos passed out champagne, foie gras canapés, and desserts while hundreds of guests milled about and talked.

“You might want to hedge your bets on this recovery,” we told one Daily Reckoning reader. “It’s probably not going to work out.”

“But I’m confused about something,” he continued. “You’ve been urging me to buy gold for years. And now you seem to be changing your mind.”

“No…no…not at all. I’m still a gold bug. It’s just that I expect this rebound to end…and for stocks to go down, possibly down a lot. The dollar is what people want when they are frightened. The dollar is going down now because they think there’s no longer anything to be frightened about. But when this recovery disappoints them, investors are going to be more frightened than ever. Because they’ll realize that we’re faced with a depression…and that the feds can’t do anything about it. They’re going to rush to the safety of dollars…at least for a while. Probably long enough to shake out a lot of gold buyers.”

Until tomorrow,

Bill Bonner
for The Daily Reckoning Australia

Bill Bonner

Bill Bonner

Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
Bill Bonner

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Comments

  1. “They’re going to rush to the safety of dollars…at least for a while. Probably long enough to shake out a lot of gold buyers.”

    What does that mean? Shake out? As in deter, or bring forth new ones?

    Reply
  2. Nice idea from Bill if you are worried about your U.S. dollars, but not such a great idea if you look at gold in $AUD terms.

    Reply
  3. Theres definately something about to happen the way USDX and commodities (gold,silver and oil) are shaping up (IMO). Which way, who knows. Maybe one last crazy up (for the commods) before another down. Either way the money makers are still hard at work.

    Reply
  4. Haha I got voted down for a question

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  5. I just voted you up Pete – Smile!!! I reckon BB meant “deter” myself?

    Reply
  6. I think what he means Pete is that if people rush to the US dollar, the US dollar will strengthen like it did last year, which means that Gold when priced in US dollars will weaken, will go down. This will scare some gold holders to liquidate there metal.

    Reply
  7. Makes sense, thanks Jason :)

    Reply

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