By Larry Edelson

Gold fell from its record-high of $1,038 set on March 17 down to the recent $850 level. But Edelson does not believe this is the end of gold’s bull market based on two possible macroeconomic background scenarios for gold.

The first scenario Edelson outlines is if the Fed’s efforts to save the U.S. economy and financial system succeed and the credit crisis eases.

Under this scenario, the Fed’s recent actions of slashing interest rates and pumping money into the economy are successful — the U.S. economy recovers and global growth resumes.

As a result, the credit crunch eases, and money flows through the pipeline. The big commercial and investment banks finally stop taking massive write-downs on bad mortgage securities, foreclosures shrink, home prices stop hemorrhaging, and home sales pick up. Businesses start hiring and consumers resume spending.

In this scenario, many on Wall Street would say that gold’s bull market would be over. However, if the Fed is successful at turning the U.S. economy and credit crisis around, it will only be because it flooded the system with hundreds of billions of paper dollars, creating wild inflation. If the economy were to pick up on top of that, between inflation and resumed economic growth, global demand for gold would soar.

The argument could then be made that when the economy turns back up, the Fed will head off inflation by aggressively raising interest rates, choking off the bull market in gold. But, from late 2004 to mid-2006, the Fed raised interest rates 17 times, in steady quarter-point increments to 5.25% from a low of 1%. And over that period, gold surged 127%! (more…)

To know which asset class will appreciate in value, you have only to follow the money. When the stock market is gobbling up all of the available discretionary funds, you know that alternative investments, such as rare coins, are going to do poorly. On the other hand, bear markets in stocks cause net withdrawals, which in turn support the prices of alternative assets as investors seek better returns.

There have been numerous articles in the financial press that have talked about the resemblances between 1987 and 2007. The topic is of interest to us because of the absolute explosion of the rare coin market that took place after the stock market crash of 1987. The crash precipitated a stampede to alternative assets like rare coins and, in a little over two years, the market in investment grade rare coins went up several hundred percent even as the price of gold fell from $500 to $360.

Financial conditions today lead us to believe that the rare coin market is poised to duplicate the bull market experienced 20 years ago. Today, we’re hearing much of the same language that we heard in 1987, when Alan Greenspan said that the world was on the edge of a global financial collapse. In fact, Greenspan said that the current market turmoil is “identical” in many ways to that which occurred in 1987.

The stock market crash in 1987 and the credit market crisis in 2007 both served to reverse the flow of funds into stock mutual funds. According to the Presidential Task Force on Market Mechanisms, appointed by President Ronald Reagan to investigate the October 1897 market crash, skittish fund shareholders withdrew billions of dollars from stock mutual funds and added to the market’s fall.

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WASHINGTON - The United States Mint will begin accepting orders for the 2008 American Eagle Platinum Proof Coins at 12:00 noon (ET) on May 5, 2008. This year’s coins feature the final design in the three-year series entitled, “The Foundations of American Democracy,” celebrating our Nation’s Judicial Branch of government.

Emblazoned on the reverse of the 2008 American Eagle Platinum Proof Coins is an allegorical image of Lady Justice, a classic symbol dating back to the Greeks and Romans. Scales, suspended from a finger of her right hand, represent the delicate balance of the law. A sword in her left hand symbolizes the power of reason, which can be wielded in either direction. The bald eagle-our Nation’s symbol of courage and freedom-watches over our firm foundation of democracy.

The coin’s reverse was sculpted by United States Mint Artistic Infusion Program Master Designer Joel Iskowitz and engraved by United States Mint Sculptor-Engraver Charles Vickers.

The obverse of the 2008 American Eagle Platinum Proof Coins-designed and engraved by United States Mint Sculptor-Engraver John Mercanti-bears an image of Lady Liberty, symbolizing vigilance and faithfulness to duty.

American Eagle Platinum Proof Coins bear the “W” mintmark denoting production at the United States Mint at West Point. Each coin is encapsulated in plastic and is accompanied by a Certificate of Authenticity. Pricing and mintages of the 2008 American Eagle Platinum Proof Coins are listed below: (more…)

WASHINGTON - Secretary of the Treasury Henry Paulson has authorized the United States Mint to issue a one-ounce ultra-high relief 24-karat gold coin, creating a 2009 version of what many have called the most beautiful gold piece ever made: the 1907 Augustus Saint-Gaudens $20 Double Eagle. The mintage of the new coin will be unlimited for one year. Among the production specifications approved by Secretary Paulson are the new coin’s business-strike finish and a diameter of 27 millimeters.

Only 2009-dated coins will be minted. The coins will go on sale in early 2009, although sales may continue into 2010 if inventory exists.

United States Mint Director Ed Moy announced at a meeting of the Citizens Coinage Advisory Committee (CCAC) on March 13, 2008, that the agency planned to recreate the Saint-Gaudens 1907 ultra-high relief $20 gold piece commonly referred to as the “Double Eagle.” The initial proposal by the United States Mint to develop this 24-karat gold coin had also been authorized by Secretary Paulson.

Through advancements in technology, the United States Mint can today produce the ultra-high relief coin envisioned by Augustus Saint-Gaudens in the early 20th century. A 27-millimeter diameter gold blank, more than 50% thicker than other United States Mint one-ounce 24-karat gold coins, will be used, because of its historical significance and the opportunity it provides to achieve the greater depth and relief to which Saint-Gaudens had aspired.

In most respects, the new legal tender gold coin will authentically reproduce the ultra-high relief gold piece. The obverse design (heads side) will be based on the obverse of the original Saint-Gaudens design executed in 1907. The reverse (tails side) also will be based on those pieces and will include 14 sun rays. The edge of the coin will feature the same raised edge-lettering as the 1907 pieces. The edge-lettering features the inscription “E Pluribus Unum” with stars serving as delimiters between the letters. (more…)

Gold and other precious metals tumbled Thursday as traders in the currency market reversed course and bid up the dollar in the wake of the previous afternoon’s statement from the Federal Open Market Committee.

Technically oriented selling was triggered as gold fell to its weakest level since the last day of 2007.

“We’re having margin selling and liquidation,” said George Gero, vice president with RBC Capital Markets Global Futures. “That usually follows after you’ve had a severe downturn like this without a rally.

“It seems to be hitting platinum. It’s hitting palladium. It’s hitting silver. And it’s hitting the crude oil, which is down to $110 (after challenging $120 early in the week). We’re having a general liquidation in commodities, mainly due to the strength in the dollar and a better outlook in the credit markets and the stock markets.”

As gold was closing, crude oil was down roughly $2.50 a barrel, which in its self tends to weigh on the metals.

June gold lost $14.20 to $850.90 an ounce on the Comex division of the New York Mercantile Exchange. As pit trade was closing, the June contract at the Chicago Board of Trade was down $14.60 to $850.60.

Comex July silver fell 38.8 cents to $16.205. As it was closing, CBOT July silver was down 39 cents to $16.191.

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