Some would say the time to sell gold is now… Gold just isn’t the misunderstood, widely shunned asset it was a few years ago. Isn’t the bull market now long in the tooth, with better opportunities to be found elsewhere?
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The reason I own gold is because I’m worried about the long-term solvency of developed market governments.
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Eventually, there will be a crisis of such magnitude that the political winds change direction, and become blustering gales forcing us onto the course of fiscal sustainability. Until it does, the temptation to inflate will remain, as will economists with spurious mathematical rationalisations as to why such inflation will make everything OK (witness the IMF’s recent recommendation that inflation targets be raised to 4%: IMF Tells Bankers to Rethink Inflation – WSJ). Until it does, the outlook will remain favorable for gold. But eventually, majority opinion will accept the painful contractionary medicine because it will have to. That will be the time to sell gold.

Grice also gets in a in a jab or two at economists:

…economists look down on disciplines which might teach them it, such as history, because they aren’t mathematical enough. True, historians don’t use maths (primarily because they don’t have physics envy) but what they do use is common sense, and an understanding that while the economic laws might hold in the long run, in the short run the political beast must be fed.

I don’t know about you, but I feel much better now…

Click to enlarge and, just in case there was any doubt, to learn the answer to the question.

I’d have to agree with the chart’s creator John Aziz when he notes:

Warren Buffett had a great ride: he grew his wealth and businesses in an era of unprecedented growth powered by OPEC oil, and later by Chinese industrialism. That era — the era of the American free lunch — is coming to an end. His insights are applicable to that era. Today is a different world.

Among the many other interesting things you’ll learn from Ned is that Warren Buffett’s father was the “Ron Paul of his day”, meaning that, Buffett the Younger’s views toward the yellow metal are likely something he didn’t learn at home.

Now, clearly, if you were looking to buy precious metals over the last six months or so, the first of the year was the time to do so, but, there seemed to be plenty of buyers stepping in there at the end of the day as the gold price is now back up to $1,705 an ounce. The GLD ETF added 10 tonnes to its holdings this afternoon and China’s central bankers were surely pleased to see today’s developments, probably adding to their stash of gold bars once again when Western traders pushed prices lower.

Iran is to accept gold instead of dollars as payment for its oil, the country’s state news agency has said.

The move comes as US and European Union sanctions against Iran have made it difficult for buyers to make dollar payments to Iranian banks.

Mahmoud Bahmani, the governor of Iran’s central bank, is reported to have said that the country would accept payment in gold “without any reservation”.
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Iran has the world’s third-largest oil reserves. Crude oil is predominantly traded in US dollars, but Iran already accepts payment in other currencies.

Likely related to this announcement comes word in this WSJ story($) about the U.S. Treasury Department interceding to stop a Dubai based bank from supporting Iranian oil sales by helping the nation evade international sanctions that were put in place to pressure Iran to give up its nuclear weapons program.

According to the report, Noor Islamic Bank, partly owned by the city of Dubai and run by Sheikh Ahmed, the son of Duabai’s ruler, was believed to have handled as much as 60 percent of Iran’s oil sales last year totaling nearly $50 billion.

As noted in this item yesterday, the new combined blog/investment website will launch in just another week or two, at which time, the cost of the newsletter will be going up quite a bit, so, anyone interested in learning more about the chart above and saving some money on a new subscription might consider going here before that opportunity passes.

As always, there is a 60-day, no questions asked, money back guarantee.

Gold and silver prices picked up where they left off in January, surging again after a three week pause on optimism that a messy debt default in Greece will be avoided, heightened tension in the Middle East, and a weaker trade-weighted dollar as bullish technical factors triggered hedge fund buying, most analysts now predicting even higher prices ahead.

For the week, the gold price surged nearly $50 an ounce (or 2.9 percent), from $1,723.80 an ounce to $1,773.60, and the silver price jumped 6.4 percent, from $33.28 an ounce to $35.41. Gold is now up 13.2 percent for the year, but down 7.7 percent from its high last year, and the silver price has gained 27.1 percent so far in 2012, now down 28.4 percent from its peak last spring.

Silver reached a five-month high at $35.70 an ounce on Friday after piercing through its 200-day moving average the day before (as indicated in red in the one-year silver chart below) and, while some analysts think it is now vulnerable to profit taking, others think this sets the stage for another assault on the $40 an ounce level, last seen in early-September prior to the vicious sell-off that affected nearly all asset classes.

[To continue reading this story, please visit Seeking Alpha.]

Of course, upper right being best and lower left being worst, it’s clear to see which assets have been the most consistent performers. But, interestingly, going back to the start of 2011 and using the iShares Barclays 20+ Year Treasury ETF (TLT), Long Treasuries are still outperforming spot gold, the former up 29.3 percent and the latter 25.1 percent higher.

And to think that Warren Buffett could care less whether the gold price is $200 an ounce or $2,000. On that subject, Bud Conrad’s  Ben Graham’s Curse on Gold provided an interesting theory for why the Oracle from Omaha has no used for the metal – his mentor, Benjamin Graham (of The Intelligent Investor fame), never lived during a time when gold traded freely.