Gold Demand Swells

gold AAAJeff D. Opdyke:  Let’s just cut to the chase: Buy gold!

Please. Buy gold!

I know, I recommend that a lot. I even sound like a broken record to myself.

But when the facts demand certain actions, well, then, those are the actions I feel compelled to tell you about over and over because I believe they’re that important.

And, right now, owning physical gold somewhere in your finances is crucial — despite the price trend in the last few years, and despite the dunderheads who tell you that gold is an antiquated asset that plays no useful role today.

They are all dead — dead! — wrong. Two recent actions underscore my assertion…

In the last week or two, this headline popped up in London’s Financial TimesOnline retailer hoards gold as crisis defense.

Turns out that Overstock.com has loaded up on some $10 million of gold and silver — metal that would be used to pay employee wages in the event of a crisis. As chairman Jonathan Johnson explains it: “We thought there’s a decent chance that there could be a banking holiday at some point caused by a crisis and it could last for two days or two weeks or who knows how long, and we wanted to be in a position where we could continue to operate during any such crisis.”

Make no mistake: That’s a U.S. financial crisis that impacts the dead presidents in your wallet.

And to be clear, Overstock owns physical metal, stored in a secure, offsite location. Management is wise enough to avoid the toxic junk known as gold exchange-traded funds (ETF). Paper gold will prove that it’s worth about as much as paper in a true crisis. When gold prices move unexpectedly higher, the market for all the gold IOUs and swaps and various financially engineered gold transactions face their own potential crisis that will cause havoc among ETF owners.

So, Overstock owns physical gold and silver — and precisely for the reason I write about all the time: insurance for the economic, monetary and governmental risks we face today.

Those are very real risks. The world today spins around an axis controlled by the central banks of major economies. If just of one of them happens to misread the situation, or acts on flawed analysis, then the status quo quickly becomes the status “uh-oh!” (And flawed analysis happens too often in government and bureaucracy, where too many ivory tower-types with no real-world experience apply theory to real-world dynamics without understanding the knock-on effects.)

Gold Demand Swells

Meanwhile, elsewhere in the world, there was this bit of news last week: Gold demand among central banks continued unabated, with central banks snapping up 175 tons of gold in the third quarter, the second-highest quantity ever, according to World Gold Council data.

Not to put too fine a point on it, but central bankers are protecting themselves from, well, themselves — or, rather, their peers in overly indebted nations that will serve as the epicenter of an epic currency catastrophe.

They realize that one slipup dooms many of the world’s major fiat currencies, and that the only insurance against a crisis fueled by central bankers is the only currency central bankers can’t control: gold.

China continued its buying spree, adding more than 50 tons of gold, while Russia led the pack adding another 77 tons to its consistently growing hoard.

Consumers (the savvy and wise ones) added huge quantities of gold, as well, to their personal holdings. Indians and Chinese combined grabbed more than 500 tons of bars and coins, each country seeing demand rise by 13%. Europeans and Middle Easterners each snapped up more than 70 tons.

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