This morning on MSN Money, Jim Cramer seen on CNBC Mad Money and The Street, posted his comments on gold. He said, “Don’t be distracted by attempts to correlate gold with global events or interest rates. The rush is as simple as supply and demand.” I have been saying this for a while now. The talking heads keep trying to correlate gold with global events like a weaker/stronger dollar or fears of inflation.
Jim said, “Two weeks ago, gold was supposed to be weak because the dollar was strong. Last week, gold was supposed to be weak because interest rates were up. But gold is going higher because of demand wholly separate from these correlations.” The truth is gold is in a bull market and is acting like it. Gold will trade inside of a trading range just like any other asset, but it is the underlying trend that is important.
Yes gold goes up when the dollar gets weaker and goes down when the dollar gets stronger but the trend is based on supply and demand. Gold’s demand is extremely strong. China is encouraging their population to buy gold coins and they are importing more gold than ever before. The US mint said that it has too much demand for silver coins and that it is worried about scalping because of the shortage of physical silver. This demand is steadily increasing worldwide. When the general public moves into gold in a big way, watch out.
Jim said he was recently blasted on twitter when he said to buy gold in the dip. The twitter post proclaimed that he should not be telling people to buy into the top. Jim had this to say in response, “Did we find much more gold? Is there less of a demand? There might be a moment next year when we see a dip in gold, when the International Monetary Fund has to sell some in order to shore up Greece, Spain, Ireland and whatever country the bond vigilantes hit next. That’s a real supply issue.”
Explanations on why gold rose or why gold fell only confuses people and creates hesitation to take advantage of an opportunity to buy at what history will probably show to be low prices. Gold is an international currency and with all of the money printing we are seeing worldwide today, you can count on gold going higher in terms of world currencies.