IN TIMES OF UNCERTAINTY, GOLD THE ONLY “GOOD MONEY”

Gold prices have been seesawing on the New York Spot Market as investors buy riskier stocks in the face of encouraging news on the strength of the economic recovery. According to The Street, “Although panic buying seems to have subsided for now, investors' long-term love for gold as a safe place to put their wealth is helping to support four-digit gold prices. Some analysts speculate that lower gold prices might also trigger physical buying in China and India, typically price sensitive markets, as bargain hunters seek to buy gold at ‘discount’ prices.” (The Street, 8/2/10)

Stocks are up on the New York Stock Exchange after upbeat economic data added to optimism about strong bank earnings in Europe. "I think the market is looking at earnings reports and saying things are not as bad as we thought," said Dave Hinnenkamp, chief executive at KDV Wealth Management. "Yes, the economic recovery won't be at a brisk pace, but companies are still earning money and their balance sheets are in good shape." Federal Reserve chairman Ben Bernanke said financial markets have improved since the worst of the crisis, but he cautioned that conditions have become "somewhat less supportive of economic growth in recent months." (CNN Money, 8/2/10)

Jeff Nielson of BullionBullsCanada.com sounded the alarm on the U.S. economy in a recent speech in which he declared, “The collapse of the U.S. economy is a certainty - only the manner in which it will happen has yet to be determined. It is just a matter of time before the global derivatives bubble will produce the same result that has occurred to every other currency not backed by gold throughout history - those currencies, our ‘money', will become worthless.” According to Nielson, "investors need precious metals components, i.e. ‘good money', in their portfolios because they are ‘currencies' that cannot be diluted through inflation or destroyed by imploding debt. He concluded his remarks with the following advice: "You need to hold ‘good money' and the ultimate ‘stores of value' - the only "good money" - is gold and silver and thus the best protection from the events that lie ahead." (Mineweb, 8/2/10)