Buy Gold Coins Now and Beat the Banks to the Punch

All the flap of late about gold hitting its ceiling is holding many investors back from buying gold coins. But things just don’t add up.

All of the economic conditions that have been pressuring the gold price upward are still getting worse, not better. Inflation by every measure is accelerating. And the world’s stronger economies are turning up the heat to ditch the dollar as the global reserve currency.

There really is no mystery here. One need only look to see who has the most to lose if gold prices were to rise to where they would be in a free market. That, of course, would be the western economies.

The sad truth is that central banks in the western nations have reached a point where the hard liquid assets they hold in reserve – i.e. gold – are but a miniscule fraction of their money supplies. That puts a whole lot of false wealth on the line.

A recent report in MarketWatch sheds some light on the problem. China is holding some $3.2 trillion of gold in reserve. Japan’s tally is $1.2 trillion, which helps explain how that country has managed to tread water for the past decade. Saudi Arabia has about $500 billion in reserve.

Now compare that with the leading western nations. Germany has $257 billion in gold, France has $172 billion, and England brings up the rear with a pathetic $46 billion.

If there were to be a war of balance sheets today, it would be no contest. China has been aware of the advantage to be gained and have been covertly building up their reserves for years, taking care not to overly stimulate the market. Now the west is finally coming to the realization that it would be wise to follow suit.

The problem for western nations is that their currencies are already severely weakened. If their central banks openly try to play catch up, gold prices will rapidly escalate and destroy what little value their currencies have left.

The Fed, of course, smugly refutes the importance of gold reserves despite its puny holding of just $148.5 billion. Who needs gold when you own the only presses that can legally print the world’s reserve currency?

Whatever the other western nations do, it will probably be a case of too little too late. None-the-less, it’s a good bet that they will start stockpiling gold in earnest to help mitigate the damages.

It would be wise to buy gold coins before they do so.

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