Thanks America for dashing my hopes of purchasing gold coins at bargain basement rates.

August 04, 2011 – Thanks America for dashing my hopes of purchasing gold coins at bargain basement rates. Has the epiphany occurred at last?

If the first few days of post-Deal gold trade are any indication, we are at the breakaway point. Although early trade today has been more typical in regards to volatility, the surge appears to be continuing unabated. While it is too early to be certain, the market may be signaling a growing awareness that for the immediate future gold is the only safe haven.

I am surprised by the reaction only because I have grown cynical about Americans’ seeming lack of ability to see the forest through the trees. I am ecstatic over the possibility of being proven wrong.

The Deal accomplishes two things: it guarantees further deficit spending and it forestalls any real action until 2013. The natural outcome should be a credit downgrade, and if the rating services hope to resurrect even a modicum of credibility they will have to follow through. Meanwhile, if by some miracle reason should prevail over the special committee, they will come to the conclusion that the only option available to get us out from under this mountain of debt is serious devaluation of the dollar.

It all adds up to one thing: any possibility of curbing the bull run in gold has been kicked down the road to 2013. Our government has lost all credibility and whatever it does next can only add fuel to the fire.

The rest of the world is stepping up their efforts to cut their losses on US debt before devaluation of the dollar brings about technical default. If the credit ratings agencies fail to downgrade US debt, which would raise the interest and buy our big creditors a little time, we are likely to see a massive dumping of treasuries. That’s an economic shock that nobody wants to consider.

There is no stopping the global move away from the dollar, and for now gold offers the best store for the excess liquidity. If the tide has indeed turned, and American investors have had their epiphany, then today’s gold bullion prices will prove to be bargain basement after all.

Kevin Johnson

Senior Staff Writer – GoldCoin.net