Dubai's AMEInfo: Buy gold to hold, not to trade


From AMEInfo, Dubai
Thursday, September 21, 2006

Dr. Marc Faber this week told Bloomberg he is a buyer of gold at and below $580 an ounce. But traders in gold have recently suffered a mauling because central banks are manipulating the market.

The Federal Reserve wants to contain inflation to engineer an interest rate cut before the November US elections. It is as plain as the nose on your face that gold market interventions of the past couple of weeks have been organized to bleed gold traders dry.

One thing that gold traders could do to help themselves is to stop publishing their latest market "insight" on Websites. The demons of the gold cartel are clearly reading everything that they write and making absolutely sure that it goes wrong.

Indeed, a section of the gold-bug community has identified the existence of a cartel or cartel-like organization within the central banking system that conspires to keep gold prices down when economic forces would suggest they should go up. This is one way of trying to control inflation, albeit it not a very good one, as curing the symptoms never cures a sickness.

However, there is no point in trying to fight such a powerful cartel. It is a futile exercise, and traders will be quickly wiped out if they insist on trying. Those who do this on margin are doubly foolish, as the irrepressible volatility of precious metals is going to catch them out sooner or later.

For to succeed in this kind of market you need to recognize the reality of a fixed gold market and buy and hold until this whole artificial construction comes tumbling down. Then gold and silver prices will soar and the holders will make a huge profit.

So buy a little gold for your portfolio, or quite a lot if you have the cash available. For gold will protect your finances against inflation, deflation, devaluation, stock market crashes, and almost any other negative economic scenario.

It always pays to be ready for a rainy day. Are we not now hearing many siren voices warning of a US housing downturn and a coming US recession, which will surely be accompanied by further devaluation of an already weak US dollar and a downturn in US financial markets?

What is the safe haven asset that will perform in such a noxious investment environment? Precious metals are pretty much immune from everything, except the central banks in the short term. So take Faber's advice and do what he is doing himself and buy gold at these price levels while you can.

Lest we forget, Faber, an AME Info columnist and celebrated contrarian, wrote the book "Tomorrow's Gold," predicting this scenario four years ago, and he has been consistently right on gold since then.

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