Gold Positioned To Jump As Markets Fall Apart

With economies around the world slowing down, currencies plummeting, and the commodity sector beaten down, there is more to the stock market correction, then, well, being a correction. That's good news for those that have been waiting for gold prices to gain some momentum.

There of course is also the tough decision ahead for the Federal Reserve, which until recently, was almost sure to raise interest rates. That's more than in question at this time, as global markets take a big hit.

Even if the Fed decides to boost interest rates, gold is still looking good, as there are just too many negative catalysts out there to make that the determining factor in the price of gold.

Not only that, but there is a growing number of people that believe not only won't the Fed raise interest rates, but the global and domestic U.S. economy may be far worse than it is, which points to the possibility of another round of quantitative easing. And we all know how gold prices would jump in case of that event. If the Fed decides to hold off for now, that is also positive for gold. So whatever way you look at it, gold prices will start to rise, and will continue to do so over the next year at least; possibly further out as well.

Safety is going to be a dominating part of the investment landscape, and gold will be one of the leading assets investors seek to protect their capital.

Gold and Silver Now Legal Tender in Arizona

Arizona state senators voted to allow gold and silver to be used as legal tender in the state.

Privately minted gold and silver will now be given the same authority and status as paper money in Arizona. That means the residents of Arizona will be able to pay their bills within the state boundaries using the two precious metals.

Along with Arizona, other states have already implemented or are looking into similar proposals. While the constitution doesn't allow states to create their own currencies, there is nothing to suggest a state can't allow coins minted by private companies to be used as legal tender.

There was some additional drama in the process of confirming the bill, which came of course from a Democrat, this one being someone named Sen. Steve Farley from Tucson,

I will hand him this, he got it right on when he attacked the approval of the proposal, seeing how it makes the failing U.S. dollar look. Farley said, "I believe the bill itself ridicules our financial system." Right you are Steve. It does all of that for sure.

What he's of course referring to is the implementation of an alternative underscores the disastrous and monstrous policies of the Federal Reserve and Ben Bernanke, where they work together to debase the currency in the name of saving the economy.

The inclusion of gold and silver as a currency, every day points to these failed policies and teaches those willing to listen that Keynesianism is dead, and printing or digitizing endless amounts of dollars to prop up an economic system that should be allowed to flush itself out so it can be really healed, is what people like this Farley oppose.

In order to work out the details of the initiative, the effective date to implement gold and silver as legal tender in Arizona was pushed out till after the 2014 legislative session.

States Looking to Gold, Silver as New Currencies

With the Ben Bernanke and the Federal Reserve out of control, and Obama spending taxpayers money at unprecedented rates, a number of states are looking to silver and gold as options for a competing currency.

Utah has already implemented such a program in March 2011, now recognizing any gold and silver coin issued by a mint in the United States as legal tender.

The law includes a provision for the coins used in Utah to be viewed the same as the U.S. dollar, which means there is no capital gains tax on the metal coins.

As for the printing of paper money, that is forbidden by the Constitution in regard to states, although they do have the power to create "gold and silver Coin a Tender in Payment of Debts."

Interestingly, local communities are legally empowered to have their own paper currencies, with the caveat that they aren't confused with the look of the U.S. dollar.

Of course creating a paper currency without anything backing in is just as bad at any government level, as the Federal Reserve's assault on the U.S. dollar has proven. The dollar has dropped 95 percent value since the creation of the Fed.

How Utah is doing it via its Utah Gold & Silver Depository, is it's developing a systme which links gold or silver holdings of people to a debit card created for that purpose. So when they use the card, money is moved back and forth between accounts in private depositories created for that purpose. That's similar to how it's done now when countries sell gold, except on a much smaller basis.

At this time, 13 states have proposals to issue alternative currencies.

Ron Paul has sponsored a bill called the "Free Competition in Currency Act," which would give states power to create their own currencies.

Gold Prices Ready to Rebound?

Gold has taken a little bit of a hit this week, as investors ignored the bad economic news and latched onto the good.

That's highly unlikely to continue for long, as the weakness in the global and U.S. economy isn't going to improve any time soon, and mounting evidence confirms we're in for a continuing recession.

Gold prices will respond accordingly and continue their upward push to who knows where, as central banks' and government policies around the world continue to debase currencies and have done nothing to make a difference economically.

As predicted by us here and a number of others, government spending exasperates the problem, it doesn't help it. And gold and gold investors will be the beneficiaries of this folly for years into the future.

In the short term, gold prices could possibly drop, maybe to $1,245, but the support is so strong, that even if it goes below that it's unlikely it'll stay there long.

The revelation, which many of us already knew, that European banks and the stress tests related to them were a joke, and the depth of the sovereign debt risk is probably even worse than we know.

Picking and choosing what economic date we want to focus on isn't a good way to get a good overall picture of what is really happening, and gold investors aren't usually the type to do that, at least those that follow gold throughout the years.

So gold will continue on its upward run, and the economic data, if it can be trusted, will support the fact the global economy is still struggling, and the recession has never really ended. It was just masked by the trillions countries through at it.

That's all good news for gold investors.

Gold Going Up on Greek Concerns

Gold dipped earlier in the session but has rebounded to level off around $1,160 an ounce.

Even though Greece and other members of the EU made it look like the loans promised the country were only as a last resort, and reiterated they may not be needed, already Greece is saying there's a good possibility they'll have to apply for the loans, making investors jittery over the implications of the move, and what that may mean for other struggling countries in the EU, who without a doubt are poised to get their share of the money once Greece has received theirs.

But not only is the need for a rescue the main thing bothering investors, but whether or not it'll even be enough to keep the country going, as there has been little done to deal with the core problem of the issue, which is Greece and its mindset itself, which has spent far beyond its means to keep its socialist agenda going.

This is why gold is holding, and may be ready to run up again, depending on how believable a bailout of the country will be as to how long it will last and if it'll take hold.

Gold is increasingly being thought of as an alternative currency, and it will continue to strengthen against paper currencies, including the euro, and is being considered a place of safety equal to the U.S. dollar by many, as evidenced by its decoupling from the U.S. dollar in its usual inverse relationship.

Greece Borrowing and Gold

Gold: The New Currency

The finance minister of Greece announced today that the country will continue to borrow, even at the high interest rates which have increased of costs of attaining capital. It generates the question of how all of this will affect the price of gold, the yen, and the U.S. dollar.

Investors are again losing any faith that is left in the country, and are very unsure as to weather Greece will be able to pay off its huge debt, which are about to become due very soon.

What the sovereign debt crisis of Greece has revealed in relationship to gold, the yen and the U.S. dollar is that gold is increasingly becoming thought of as a form of currency by a growing number of people, which is the reason you see it moving in tandem with the U.S. dollar and yen on some days people are looking for a safe haven for their money.

That means there is a lack of faith in all paper currencies at this time, and while the dollar and yen will continue to be considered to be a relatively safe place for people to place their money, gold is growing in influence, and for many, is by far the safest place to put their money in economic times like these.

The Greek debt crisis has brought this to the surface for all to see.

Gold: The New Currency

Gold Considered a Currency Again

Gold the currency

One good thing about the irresponsible and outrageous practices of central banks and governments around the world in debasing their currencies in order to make it look like they're doing something to boost their economies, is the more they do it and fail, like they have been, the more investors and people who wouldn't normally think of it, are starting to focus on gold being a form of currency, which it of course is, but hasn't been thought of that way by most for some time.

Even if it's considered an alternative currency, that fact that alternative is attached to it doesn't diminish its ability to maintain your wealth and spending power.

While there are some ancillary factors besides gargantuan debt involved with the increase in the price of gold, at this time debt is the major factor, and there is nothing that will change that for a long time, as governments at this time don't have the will to stop printing money because of fears of being voted or removed from office.

Having seen the tremendous weakness inherent in the banking systems around the world, people now are understanding they're at risk, and gold is rising as one of the chief currencies of the world as it has been in the past.

Gold Commodities

Wells Fargo (NYSE:WFC): Swiss National Bank Intervention

Swiss National Bank Intervention

After the euro rose against the Swiss franc and U.S. dollar today, rumors circulated there was intervention from Swiss National Bank, which they declined to comment on. Wells Fargo (NYSE:WFC) currency strategist Vassili Serebriakov said, "There was suspected intervention by the Swiss National Bank. The sharpest movement in the euro was against the Swiss franc, but it looks like it also helped the single currency across the board."

Others agreed there was no doubt Swiss National Bank intervened, but assume there will never be a confirmation they indeed did.

The gain by the euro against the franc was the best performance in nine months.

Eldorado Gold (NYSE: EGO) Chinese Currency Exposure

Any time and company enters a foreign market, they gain exposure to flucuating value in the nation's currency, and that's the case with Eldorado Gold (NYSE:EGO) when they entered the Chinese market in 2009 via the acquisition of Sino Gold Mining in China.

While a small change in the value of the reminbi wouldn't have a significant effect on Eldorado Gold, a major move definitely would.

But taking that into account, the Chinese have never succumed to pressure to float their currency, and while thinking about it for the long term, over the next several years it's highly unlikely to happen.

Even so, investors in any company with China exposure need to know the effects of a change in monetary policy of the Chinese, especially if it's allowed to move upward in strength.

In the short term there's nothing to be concerned about with Eldorado Gold and other gold mining companies, but it does need to be taken into consideration for those planning on holding the company for some time.

US Gold Futures Up Slightly

U.S. Gold Futures

U.S. gold futures ended the day up a little, as it finished the day on the COMEX at $1,108.20 an ounce, a slight 10 cent increase.

Currencies moved very little, giving little indication or guidance for gold.

A number of gold traders said the possibility of China monetary tightening could move the gold market going forward.

U.S. Gold Futures