Investors Still Favor Gold As Hedge Against Devalued Dollar

  • Posted Thursday, August 21, 2014 at 08:39 PM

TANGIBLE INVESTMENTS - Los Angeles - by James O'Dell - Precious metals prices turned sharply lower on Thursday, with Gold sliding $20.30 or 1.57 percent to $1,275.70 an ounce in thin trade after renewed speculation arose following the release of the July minutes of the Federal Open Market Committee (FOMC) meeting that a rate increase from the Fed may come sooner-than-expected. The price of Silver inched modestly lower to $19.47 an ounce.

For those that believe the Fed will raise rates early, this statement was approved by policymakers with just one dissention. "The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run."

Julian Phillips of the Gold Forecaster suggested recently that the current low volume of trade may turn around in September. With traders from the large banks and hedge funds still on vacation, many believe this spike lower to be nothing more than your typical low volume head fake.

Trading volumes in Gold futures (paper Gold) have fallen 74 percent below the average for the past 100 days in London, according to data supplied by Bloomberg. The potential has increased for a surge in physical demand from India with the festival season starting soon, and the monsoon season likely to be normal for August and September, according to reports.

Meanwhile, five months ago the U.S. Mint resumed its Platinum coin production, but as of August, sales have nearly collapsed, with investors continuing to overwhelmingly turn to Gold and Silver as their favored hedge against a devalued dollar.

The Mint restarted production of the Platinum coins following a six-year hiatus after the director of the mint in 2008, Edmund C. Moy, canceled the Platinum coins due to declining sales. “The law states that the Mint cannot lose money on its bullion products, yet sales barely made break even,” said Mr.Moy, in an interview on Aug. 11.

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