Gold drifts higher ahead of next week’s Fed meeting; ‘I think gold is cheap’ says Intelligent Investing’s Chambers
(USAGOLD –12/11/2020) – Gold drifted higher in early trading as Washington gridlocked on stimulus legislation and investor interest turned to next week’s Fed meeting. The yellow metal is up $2 at $1841. Silver is level at $24.06. Yesterday we mentioned the end-of-year, see-saw price action in precious metals and reminded (with our customary caution) that in recent years the market established solid footing in and around December 15th before beginning a move higher. (Please see this short study.) Intelligent Investing’s Glen Chambers sees the current gold market as playing to the long-term investor’s advantage. “Are we in for high inflation over the next three to five years or not?” he asks in a recent Forbes magazine article. “I say yes. Everything pivots on that for me. It’s an easy road for investing if you say yes. You don’t have to be an investment guru to say that if we get high inflation then gold and commodities will go up a lot.” He thinks “gold is cheap” and that those who believe in the metal “should be dollar-cost averaging into a position.”
Chart note: We have had quite a few new visitors over the past several weeks who are looking into gold for the first time. This chart more than any other, we feel, is central to understanding why gold continues to make sense as a long-term portfolio holding. When the United States abandoned the gold standard in 1971 and freed currencies to float against the dollar, the fiat money era began. We are still in that era today. This chart shows the performance of gold from the early 1900s to 1971 when gold-backed the dollar and the era from 1971 to present when it did not. Gold has had its ups and downs since 1971, but clearly, over the long run, in the absence of an official gold standard, individual investors have been well-served by putting themselves on a private gold standard.