Gold Back Above $1,200 per Ounce

Yesterday gold surged above $1,200/oz. for its best day since January.

• Reports on Friday sad Venezuela's central bank had converted 1.4M oz. of its gold reserves into at least $1B in cash through a swap with Citibank. 
• "That was a huge potential seller taken out of the market. It's not an overhang anymore," Dennis Gartman said on the Venezuela deal.
• Other gold watchers say the bigger factor driving prices was the expiration of May options and short covering; an increase of 13K shorts in the market is a positive since those traders could be forced to buy gold when they cover, says Kevin Grady of Phoenix Futures and Options.

Today gold futures are higher again:

Gold testing a 15-year trend line:

Gold prices retraced the 61.8% Fibonacci level 

Is the bottom in?

• Current Quote for the Price of Gold
• Gold and GLD Resistance and Support Levels
  Three Key Charts to watch

Are you Long, neutral or short gold?  

I have a gold trade in my newsletter.

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Gold Resistance and Support Levels - Three Key Charts to Watch

Resistance and Support Levels for the price of gold and its ETF GLD.   Gold may be bottoming at a support line I pointed out in my January 2014 article.  Feel free to voice your opinion at my Facebook group.

• Gold and GLD Resistance and Support Levels Three Key Charts to watch
  
• Quotes and Charts for Gold & GLD (the ETF for Gold) 

Post by Kirk Lindstrom's Investment Letter.

CDs are also a way to wait for higher rates... as unlike bond funds, you won't lose money in the short term if interest rates go up AND you can get higher rate CDs when yours mature.  I'd go with 1 or 2 year CDs as my guess is interest rates will be higher in the near future

Gold chart

Gold Testing Support

Gold is testing support of a falling trend line from above.

Here is a larger chart showing the active trendlines. 

More GLD info plus my charts

Disclosure: I have a small, personal position in GLD () for an attempt to profit from a counter trend rally.  I have a mental stop loss and will not post what it is or post when I take it...  I have not added this GLD trade to my newsletter explore portfolio as I am still experimenting with this idea.  Also, I have stocks I like with what I believe is far more upside in my explore portfolio  Also, I have larger personal positions in those "explore" stocks.

Gold Head & Shoulder Top Pattern

There is a perfect head and shoulders top formation for gold that was successfully tested from below this month. 

• For a definition, see  "Head-and-Shoulders Top."
• Remember, this pattern is in effect until there is a close above the neckline.

After I calculate the minimum target price, I'll send an update to my newsletter subscribers with a new chart and the minimum target. 

Kirk Lindstrom's Investment Letter

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==>   My returns by year  &  New Record Highs <==

This chart shows my newsletter "Explore Portfolio" from 1998 as it makes yet another record, all-time high!

For more of my gold articles, see:

• April, 2013: With Market At Record Highs, The Dow/Gold Ratio Is Still Low On An Historical Basis
• Dec 2012 Dow/Gold Ratio Remains Low On Historical Basis

Gold & GLD Resistance and Support Charts

Charts showing the important resistance and support levels for Gold and its exchange traded fund, GLD.  This morning I sent buy and sell levels for potential GLD trades to my subscribers.  If you would like to get this email, subscribe to my newsletter and I will send it to you.

Gold appears to be testing its 3-year low near the 61.8% Fibonacci retracement of the run from $681 to $1,923.70 per ounce.  

Click images to view full size

If the  61.8% Fibonacci support fails, then the next major support level for gold is the 2008 high of $1,033.90.

This graph shows gold prices for the last three years .  

This graph shows resistance and support levels for GLD, the exchange traded fund for Gold and my first choice as a low cost way to trade gold.

More charts and current quotes:

• Gold Price per Ounce - Charts and Quote
• GLD - Charts and Quote

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A Gold Digger

Dubai Gold Diet - Your Weight in Gold Campaign

CNBC's "matronly" Sue Herera just reported "50% of the population in Dubai is now considered overweight to obese and that is a HUGE, HUGE change." 

According to the International Business Times:

• Because of the increasing obesity rates in the UAE, many health campaigns have been launched in the UAE, but Dubai’s campaign could be the most successful for individuals looking to lose weight. 
• According to Agence France-Presse, the “Your Weight in Gold” campaign is paying one gram of gold for every kilogram, 2.2 pounds, of weight lost. 

A gram of gold is worth about $45 at current prices.

•  In order to get paid to lose weight, individuals must lose at least two kilograms, 4.4 pounds, before Aug. 16
• The campaign does run during Ramadan, with its customary fasting from dawn until sunset, but does not mean the program will result in a fortune lost for the municipality. As AFP notes, while individuals cannot eat or drink any liquids until sunset, many Muslims tend to indulge in large feasts after the required fasting.

Local media Wednesday quotes Dubai official Hussain Lootah as saying there is no limit on the payout for the golden losers, who must sign up and weigh in Friday. 

The minimum drop is two kilograms, or 4.4 pounds, to cash in.

Today Gold is selling for $1,228 per oz.  

• 4.4 pounds x $45 per 2.2 pounds lost = $90
• Current Gold Prices

Gold -to-Silver Price Ratio Falls Below 30-Year Low

With the price of silver soaring faster than gold, the gold-silver price ratio has plunged below its 1983 low of 31.97. The gold-to-silver price ratio, defined as the price of an ounce of gold divided by the price of an ounce of silver, closed Wednesday (April 27, 2011) at 31.93. This means an ounce of gold is now less than 32 times more expensive than an ounce of silver.

Just four weeks ago, on March 31, 2011, the gold-to-silver price ratio was 37.98 when an ounce of gold was nearly 38 times more expensive than an ounce of silver.

• Gold ETF GLD Charts and Quote
• Silver ETF SLV Charts and Quote

Read my full Seeking Alpha article with more charts at:

• Gold / Silver Price Ratio Just Below 30-Year Low

Current Holdings: Personally, I own a very small amount of gold and silver hidden in the house for bribes if we see Armageddon. I also own silver and gold coins mostly as a collector but they would serve as currency in a disastere. For inflation protection, I own individual TIPS "treasury inflation protected securities" and Series I-Bonds. I recently sold my managed TIPS mutual funds (FINPX and VIPSX) after the recent surge in TIPS had the spread for the 5-year near record negative lows and used some of the funds to buy a new, individual TIPS with a positive return relative to inflation.  If the base rate for 5-year TIPS returns to a positive level, I may buy the TIPS ETF TIP rather than the managed funds I recently sold.

To best prepare for Armageddon, I own a

• MSR MiniWorks EX Microfilter

MSR MiniWorks EX Microfilter

I can use this to make drinking water from all the swimming pools and hot tubs near me plus the creek around the corner.  I can then trade the drinking water for food and fuel if my extra supplies in my "earthquake kit" run out.

Full List of Kirk Lindstrom's Articles at Seeking Alpha

• ECRI's WLI at 42 Week High: 'Get While the Getting Is Good'
  
  
•  Global Inflation Pressure Rising: How to Profit

Gold/Silver Price Ratio Plunges Below 27-Year Low

Update 7/29/13:

• Jim Cramer's "Action Alerts Plus" Charitable Trust Portfolio Performance: 2013

With silver prices continuing to make new highs while gold has not made a new high, the gold:silver price ratio plunged to a new low dating back to 1983!

The gold-to-silver price ratio, defined as the price of an ounce of gold divided by the price of an ounce of silver, closed Monday at 37.99. This means an ounce of gold is now less than 40 times more expensive than an ounce of silver.

Charts of the gold-to-silver price ratio, GLD, SLV, Gold and Silver prices plus the rest of my Seeking Alpha article at:

• As Gold/Silver Price Ratio Continues Plunge, What to Purchase

Current Holdings: Personally, I own a very small amount of gold hidden in the house for bribes if we see Armageddon. I also own silver coins for a similar purpose. For inflation protection, I own individual TIPS "treasury inflation protected securities" and Series I-Bonds. I recently sold my managed TIPS mutual funds (FINPX and VIPSX) after the recent surge in TIPS had the spread for the 5-year near record negative lows.  If the base rate for 5-year TIPS returns to a positive level, I may buy the TIPS ETF TIP rather than the managed funds I recently sold.


To best prepare for Armageddon, I own a

• MSR MiniWorks EX Microfilter

MSR MiniWorks EX Microfilter

I can use this to make drinking water from all the swimming pools and hot tubs near me plus the creek around the corner.  I can then trade the drinking water for food and fuel if my extra supplies in my "earthquake kit" run out.

.



Full List of Kirk Lindstrom's Articles at Seeking Alpha

• ECRI's WLI at 42 Week High: 'Get While the Getting Is Good'
  
•  Global Inflation Pressure Rising: How to Profit

Jim Cramer Recommends Gold and Gold Corp.

Update 7/29/13:

• Jim Cramer's "Action Alerts Plus" Charitable Trust Performance: 2013

Today on CNBC's "Street Signs" at about 11:30AM PST Amanda Drury interviewed Jim Cramer for their regular "stop trading" segment.  Gold (Quote and Chart) closed at $1,410.90 per ounce near its all time high.

Jim Cramer was very excited about Gold.  Cramer said

• "I've been a gold bug since 'Mad Money" began.
• EVERYONE should have ten to twenty percent of their portfolios in gold.
• Gold is "extraordinarily poised to go up better than ANY OTHER ASSET in the world."
• Gold "could see $1,550 very quickly"
• Gold "could" see $2,000 per ounce within 18 months.
• "They can't find the stuff."
• EVERYONE must own gold!
• "Gold is your antidote to what is going on.... Chaos in Washington.  Chaos in the Middle East."

Today Gold closed at $1,410.90 per ounce near its all time high.

When asked what he liked for a stock pick, Jim recommended Goldcorp (GG).  Jim said he likes GG because of their low p[roduction costs and "ability to find the stuff."

Today GG closed at $49.34, slightly below its all time high

I wonder how many people will add Gold or Goldcorp to their portfolios now near all time record highs based on Jim's advice.

Questions:

1. Can anyone verify that Cramer has been a gold bug since his Mad Money show began?  
2. Has Cramer had Gold in his action alerts portfolio for 10 to 20% from the start? 
3. Was it a small position that grew with the large gain in gold? 
   Or 
4. did he add Gold recently?

Personally, I own a very small amount of gold hidden in the house for bribes if we see Armageddon, but I own "treasury inflation protected securities" (TIPS) mutual funds (like the ETF TIP or managed funds FINPX, VIPSX) and Series I-Bonds, as well as individual TIPS. I also believe it is a good time to own equities, including SPY, the exchange traded fund for the S&P500, for both inflation protection and income.

The individual 30-yr TIPS I said I was buying in "How to Play Expected Inflation From the TIPS Spread" are up about 6% in just two weeks already. I am not making any predictions for the price of Gold, but individual TIPS bought directly from the US Treasury are safe since they won't lose money if the price of gold crashes.

More Information:

• Gold Charts and Quote
• TIPS Funds: FINPX and VIPSX  
• Amanda Drury Fan Club

More pictures of Mandy Drury

Gold to Silver Price Ratio Near Multi-Decade Lows

The gold-to-silver price ratio, defined as the price of an ounce of gold divided by the price of an ounce of silver, closed Wednesday at 45.16 This means an ounce of gold is just over forty five times more expensive than an ounce of silver.

Charts of the gold-to-silver price ratio, GLD, SLV, Gold and Silver prices plus the rest of my Seeking Alpha article at:

Gold / Silver Price Ratio Near Multi-Decade Lows

As my chart shows, twenty years ago in 1991, gold was over 100 times more expensive than silver. Since then, the gold-to-silver price ratio never went below 41.51.

Dow-Gold Price Ratio at Strong Resistance

The Dow-gold ratio is right at its long-term, down-trending resistance level. The Dow-gold ratio is defined as the ratio of the price of the Dow Jones Industrial Average (DJIA) divided by the price of gold.

Charts of the Dow-gold ratio price ratio and the price of gold plus the rest of my Seeking Alpha article at:

Dow-Gold Ratio Now at Strong Resistance, Will It Break Higher or Lower?

At 8.96, the DJIA, measured in how many ounces of gold it takes to buy the 30-stock Dow, is up 27.5% from its 17-year March 6, 2009 low of 7.03. But, as the chart shows, the ratio has been in a fairly flat, two-year trading range as it moved from long-term support to resistance.

Hyperinflation Possible By Year 2015 Says NIA

The National Inflation Association, or NIA, says hyperinflation is "possible"by 2015 and Ron Paul is the "only hope to prevent US Hyperinflation." Below are some excerpts from the NIA website:

The U.S. government this week reported a record monthly budget deficit for February 2010 of $220.9 billion. Total tax receipts for the month were only $107.5 billion compared to outlays of $328.4 billion. The total U.S. deficit for the first five months of fiscal year 2010 was $651.6 billion, with tax receipts of $800.5 billion and outlays of $1.45 trillion. The deficit was up 10.5% for the first five months of fiscal year 2010 over the same period in fiscal year 2009.

We are now at a point where if the U.S. government taxed Americans 100% of their income, the tax receipts generated would not be enough to balance the budget.

Likewise, if the U.S. government cut 100% of its spending including defense, but kept paying Social Security, Medicare and Medicaid, we would still have a budget deficit.

NIA believes it will be impossible for the U.S. to have a balanced budget ever again.

If the Federal Reserve raises the federal funds rate up to just 2% during the next year, NIA believes the interest rate on our public debt could rise to 5% and our annual interest payments will likely rise to $500 million or 23% of projected 2010 tax receipts of $2.165 trillion.

We find it shocking that the White House is projecting an interest rate on our public debt in 2014 of only around 4%.

If the Federal Reserve doesn't raise the federal funds rate to above 5% in the short-term, in our opinion, an outbreak of double-digit inflation is inevitable.

NIA believes the real rate of U.S. inflation to already be approximately 5%.

By 2014, it is possible the Federal Reserve will be forced to raise the federal funds rate up to above 10% and the public portion of our national debt could exceed $15 trillion. Therefore, in 2014 we could see the interest payments on our national debt reach $1.5 trillion, about triple what is currently being projected and 43% of the government's projected tax receipts that year of $3.455 trillion.

NIA believes hyperinflation is possible by the year 2015. Besides the rising interest payments on our national debt, another major catalyst for hyperinflation will be social security payments, which adjust to the CPI-index. As the government's CPI-index rises, so will the social security payments that it owes. This could cause a death-spiral in the U.S. dollar. Inflation is still the last thing on the minds of most Americans, but soon it will be their primary concern.

For full articles, see the NIA website for

• U.S. Hyperinflation Possible By Year 2015
• Ron Paul Only Hope to Prevent U.S. Hyperinflation

I should note that I don't agree with NIA that we will get hyperinflation (inflation over 10%) FOR SURE if Ron Paul is not elected president of the United States in 2012, but their concerns are worth paying attention. Even if Ron Paul is elected president as a third party Libertarian, the US House and Senate would still be controlled by democrats and republicans so we'd probably have gridlock where nothing would be done. We'd need to get Libertarians like Ron Paul into majority positions of both house and senate to break the cycle and I see the odds of this happening as near zero.

I also think we could avoid hyper inflation with something like "stagflation" were we get moderate to high (2 to 10%) inflation with low economic growth due to high unemployment and globalization keeping a lid on wages. Changes like delaying the age one can collect Social Security and higher taxes can also help but those changes will be painful to those who have not positioned their portfolios for this.

Make sure you read my other related articles:

• Using Asset Allocation to make money in a Flat Market
• FNSR: Finisar up 571% Over Past Year
• China Will Not be Adding to Gold Reserves
• George Soros Says Gold is in Early Stage of Asset Bubble
• Part 1 Gold: Five Investments for Higher Inflation

and

Kirk's Two Investment Letters

Charts and current quotes for:

• SPDR Gold Trust ETF
  
• Gold Prices
• CRBQ
  
• TIP
  
• VIPSX

China Will Not be Adding to Gold Reserves but Says Gold Not a Bad Asset

Yi Gang, China's head of the State Administration of Foreign Exchange also know as "SAFE" told reporters US Treasuries remain important to China but they would not be adding to their gold reserves. Yi Gang said:

"The U.S. Treasury market is the world's largest government bond market. Our foreign exchange reserves are huge, so you can imagine that the U.S. Treasury market is an important one to us."

Gold quote and charts
Gold currently $1,117 per oz.

Reuters reported:

Speaking during the annual session of parliament, Yi expressed the hope that China's presence in the U.S. Treasury market would not become a political football. China, he stressed, was not in the game of short-term currency speculation.

"It is market investment behavior, and I don't want it to be politicised," he said. "We are a responsible investor, and we can surely achieve a win-win result in the process of investing."

The Wall Street Journal said China's gold reserves were 1,054 tonnes at the end of 2009. A metric tonne is a unit of mass equal to 1,000 kg (2,204.6 US poundslb) or approximately the mass of one cubic metre of water at four degrees Celsius.

Yi Gang disapointed gold investors by saying he didn't think gold was a great investment for those with a 30-year time horizon.

"Gold is not a bad asset, but currently a few factors limit our ability to increase foreign-exchange investment in gold."

and

"It is, in fact, impossible for gold to become a major investment channel for China's foreign exchange reserves. I have 1,000 tonnes now, and even if I doubled that holding, according to current prices, that would be about $30 billion."

The Wall Street Journal article continues:

Currently, China is the world's sixth largest official holder of the metal at 1,054 metric tons, data from the World Gold Council from the end of 2009 shows.

That accounts for 1.5% of the country's total reserve holdings, a small amount compared with the largest gold holder, the U.S., where gold holdings account for 68.7% of total reserves.

There is no way gold could be a meaningful percentage enough to count.

China doesn't disclose the exact composition of its reserves but the consensus is about two-thirds are invested in dollar backed assets. Yi Gang said SAFE has diversified its holdings beyond the dollar with investments in the euro, yen and some emerging market currencies.

"The foreign exchange reserves are mainly invested in bonds issued by governments and government agencies of the developed and developing countries with high credit ratings, assets issued by companies and international organisations, funds and so on."

More information:

• George Soros Says Gold is in Early Stage of Asset Bubble
  
  
• DOW Gold Ratio Remains in Downtrend
  
  
• Gold quote and charts
  
  
• US Treasury Rates at a Glance

George Soros Says Gold is in Early Stage of Asset Bubble

George Soros believes gold is in the early phase of an asset bubble. Just as NASDAQ staock were a good buy in 1998, Mr.Soros thinks gold is a good buy now.

Make sure to read

• Gold: Five Investments for Higher Inflation
  
  
• March 2010: DOW in Gold - DOW:Gold Ratio

From Soros signals gold bubble as Goldman predicts record at the Financial Post:

"When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment," Mr. Soros said at the World Economic Forum's annual meeting in Davos, Switzerland, in January. "The ultimate asset bubble is gold," he said.

In a Jan. 28 Bloomberg Television interview, the 79-year-old billionaire recalled that former Federal Reserve Chairman Alan Greenspan warned of "irrational exuberance" in financial markets three years before the technology bubble burst in 2000. The Standard & Poor's 500 Index rose 89% in the period.

Buying at the start of a bubble is "rational," Mr. Soros said.

According to a Feb. 16 Securities and Exchange Commission filing, the $25 billion "Soros Fund Management LLC" increased its investment in the SPDR Gold Trust GLD (Quote and charts) by 152% in the fourth quarter. GLD is the world's largest exchange-traded fund for gold.

Click for full size image courtesy of stockcharts.com

See recent articles:

• Part 1 Gold: Five Investments for Higher Inflation
  
  
• March 2010: DOW in Gold - DOW:Gold Ratio
  
  

Chart of Gold vs GLD

Quotes and Charts for
Gold and GLD

Part 1 Gold: Five Investments for Higher Inflation

My recent article titled "ECRI Global Inflation Outlook - Higher Inflation Ahead" showed that inflation pressures are building globally. In the United States, December CPI came in at 2.7%.

Just last week, ECRI, the Economic Cycle Research Institute, said "With the USFIG now advancing for ten straight months, underlying inflation pressures are in a sustained cyclical upswing, promising higher inflation in the coming months." Even in Japan, the threat of persistent Japanese deflation "continues to recede."

In this series of article I will discusses five investments that should do well in an environment of higher inflation. These are

1. Part 1: Gold
2. Part 2: Cash
3. Part 3: Series I-Bonds
4. Part 4: TIPS and TIPS Funds
5. Part 5: Commodities

Part 1 Gold

Gold is the traditional investment people use to hedge for high inflation. Gold is also a popular hedge for an "Armageddon Type" disaster but I prefer a portable water filter that I can use to make clean drinking water to trade for whatever I need.

Obviously Gold was a much better investment ten years ago when it was 79% lower.

Click chart courtesy of stockcharts.com for full size image

Gold's price may have already anticipated future inflation. After all, the US and most other nations have been running budget deficits for a decade while gold has soared. Also, if you need more gold, you can hire people to dig it out of the ground for you. This could increase supply if wages remain low relative to inflation. Of course, if governments across the globe continue to spend like crazy and print money, then currencies could crash and gold would soar far higher.

How to Buy Gold

• You can buy gold bars and store them yourself. Don't forget the cost of insurance, security systems and storage costs when calculating your return.
  
  
• You can buy gold coins and store them yourself. There is usually a large amount lost on the "bid ask spread." That means if you pay a dealer $1,000 to buy a gold coin, make sure to ask what he's willing to buy it back from you for. Before he knows you are considering buying, ask what he'll pay you for the coin you are interested in.
  
  
• You can buy gold mining stocks. With so many people willing to work for low wages around the globe, the cost of extracting gold from the ground might not go up nearly as fast as inflation. This would be good for gold mining stocks but maybe not for the metal itself. Of course, poor management or fraud could sink a gold mining stock even if gold soars so diversification is wise to spread specific stock risk.
  
  
• You can buy the ETF (exchange traded fund) for gold which has the symbol GLD (GLD Quotes and Charts). This would be my first choice as a way to buy gold other than the few small pieces I have hidden around the house worth a few hundred dollars for emergencies.

Disclosure: I sold all my bonds and bond funds not indexed to inflation. Besides cash in many CDs and savings accounts, I own TIPS, TIPS mutual funds and Series I-Bonds. I also own and cover these investments in my newsletters. See Kirk's Two Investment Letters for more information.

Charts and current quotes for:

• SPDR Gold Trust ETF
  
• Gold Prices
• CRBQ
  
• TIP
  
• VIPSX

Next: Read the next article in the series "Five Investments for Higher Inflation: Part 2: Cash"

Gold Quote:

Flash Player 9 or higher is required to view the chart
Click here to download Flash Player now

View the full FUTURE:GC00 chart at Wikinvest

.

Jim Rogers Expects Inflation; He's Long Silver and Short Long Term Treasuries

Jim Rogers says he expects the actions by governments around the globe to save their economies will cause inflation and crash the US dollar. As such, Rogers is short long-term US Treasuries (US Treasury Rates at a Glance) and long silver.

Rogers has a good long-term record. For one, he has been short the banking stocks this past year as they have crashed and burned. Rogers was also a co-founder with George Soros of the Quantum Fund. " During Roger's ten years with the fund, the portfolio gained more than 4,000%, while the S&P rose less than 50%.

Today "Business Intelligence - Middle East" reported in "Jim Rogers says get rid of dollars, buy silver " the following quotes from Rogers speaking to a group of private bank clients:

• "The fact that the dollar is gaining rapidly is only temporary"
• "Within a year you'll have to get rid of the dollar"
  

Rogers also said US government bonds are extremely overvalued.

• "They are "the world's last bubble."

Rogers explained that government economic rescue plans will force governments to issue more debt, print money and flood the markets with liquidity which will flare up inflation after the crisis is over and create worse problems.

Rogers says "zombie banks" kept alive by Paulson and Bernanke should be allowed to fail. He compared it to Japan which refused to let banks fail in the 1990s.

• "It's 18 years later and their stock market is 75% or 80% below what it was 18 years ago"
• "I know we are going to get aggressive rate cuts everywhere, that's why I'm long short-term government bonds in the US, but shorting long-term government bonds because it's not going to help, it's going to add to inflation."
  

Rogers expects investors to return to precious metals as a hedge against inflation.

• “Silver will do better than gold. It’s been beaten down horribly. If you put a gun to my head and said you have to buy one, I would buy silver rather than gold.”

Rogers think gold may fall as central banks and the International Monetary Fund (IMF) sell the metal to raise cash.

• “The IMF has gigantic amounts of gold. Maybe gold is going to go down for a while. If gold does go down, I’m going to buy more.”

Another way to hedge against high inflation is to buy TIPS or Treasury Inflation Protected Securities.

I recently bought Vanguard's TIPS fund (VIPSX Charts) which, like Silver, is down about 30% from its peak set earlier this year. As I describe on page 9 of the November 2008 issue of "Kirk Lindstrom's Investment Newsletter," I like to triple diversify the fixed income side of my asset allocation into

1. Bond funds that do well when rates fall,
   
2. Cash, CD and Treasury-Bill ladders, Money Funds and quality short-term bond funds for current income
3. I-Bonds and TIPS for inflation protection.
   

By having three fixed income buckets, I can rebalance after one of the buckets has a period of out performance. For more on that strategy, see " Using Asset Allocation to make money in a Flat Market."

Post your Comments on this story here

For more, see:

• US Treasury Rates at a Glance
  
  
• World Stock Markets at a Glance
  
  
• ECRI WLI Growth Rate Plunge Continues to New Record Low
  
  
• Best 1-Year CD Rates with FDIC
  
  
• I-Bond and Series EE Bond Rates for November 2008

How Many Barrels of Oil Will One Ounce of Gold Buy?

Crude Oil Price in Gold: This chart shows the price of oil ($WTIC), the price of gold ($GOLD) and the number of barrels of oil one ounce of gold would buy for dates between January 1990 through today.

Currently, one ounce of gold will get you 6.68 barrels of oil.

I think the chart makes it quite clear why Saudi Arabia and some others think oil is too high.

When Bill Clinton was president of the US, one ounce of gold could buy between 7 and 28 barrels of oil with the lowest ratio, 7.23 barrels of oil for one ounce of gold, occurring shortly before his last day in office.

It is interesting that during President Bush's term (following Bill Clinton) one ounce of gold bought between 6 and 16 barrels of oil with the lowest number of barrels per ounce in 2005 at 6.15. At today's record high prices for oil, we get slightly more barrels of oil (6.26 vs 6.15) for an ounce of gold!

Also of note is the 19 year support line indicates we are near an extreme level again.

Here is the same chart with the US Dollar ($USD) index added.

If the dollar has bottomed and we can make it go up again, perhaps with an energy program that does not send trillions of dollars to OPEC and higher Fed Funds rates, then US consumers could get some relief at the gas pump.

Discuss this article at our "Investing for the Long Term" facebook forum called "Energy, Oil prices, Alternative Energy, etc."

My Returns 1/1/1999 through 05/31/08

My "70:30 Explore Portfolio" was up 198.7% or 12.3% compound annual return.

• $100,000 invested 1/1/99 became $298,674
• Subscribe TODAY and get the June 2008 issue for FREE!

My "50:50 Conservative Core Portfolio" was up 72.5% or 6.0% compound annual return.

• $100,000 invested 1/1/99 became $172,470

My "80:20 Aggressive Core Portfolio" was up 72.3% or 5.9% compound annual return.

• $100,000 invested 1/1/99 became $172,261

VFINX (S&P500) was up 31.7% or 3.0% compound annual return.

• $100,000 invested 1/1/99 became $131,745

Vanguard's Money Market Fund was up 38.8% or 3.5% compound annual return.

• $100,000 invested 1/1/99 became $138,784

To find out how I've profited greatly from these difficult market conditions over the past decade, subscribe to "Kirk Lindstrom's Investment Newsletter" today!

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