When to Sell Gold and at How Much Price?

When to Sell Gold and at How Much Price?

The gold price has been skyrocketed since past couple of years and investors are now diverted towards buying a gold. But many investors and the readers of this blog have asked me in the past few weeks that, When to Sell gold and at how much price?

Many readers have also argued that, the gold price will come down from this level of US $ 1400 per ounce (Almost Rs.21,000 per 10 grams).

But well, let me tell you frankly that the gold price won’t come down until the US Government won’t stop printing more dollars out of thin air.

Since 2008, USA has massively expanded its monetary base (Money supply) from just $ 800 Billion to US $ 2 trillion. And in Early November 2010, it has printed more US $ 600 Billion to save its economy.

Thus, in layman’s language, this newly printed money will dilute the purchasing power of the existing money in the circulation causing gold price to shoot up further.

Watchingthegold.org said,

* Unprecedented growth in federal government debt, which adds to the political attractiveness of price inflation. There were federal deficits during the 1970s, but nothing like today’s – just enough to give the party out of power at any time something to talk about.
* The accumulation of U.S. Treasury debt and privately issued dollar debt in the hands of foreign investors. U.S. debt to foreigners wasn’t a factor in the years leading up to gold’s 1980 peak. This time around, it could be a powerful force for accelerating inflation. Even moderate inflation could spook foreign investors. Their sales of Treasuries and other dollar-denominated IOUs would push down the foreign exchange value of the dollar, which would raise the cost of imports coming into the U.S., which would further stimulate price inflation. A nasty feedback.
* And foreign holdings of U.S. debt operate as a second vector feeding the political attractiveness of dollar price inflation. Depreciation of the dollar can be framed as a clever way to shortchange foreign creditors. “It hurts THEM, not US” would be the slogan.

Thus, all of the above factors will drive the gold price still higher.

So When you should sell the gold? What will be the peak price of the Gold? Well, in simple language, you should sell gold when the US Government stops printing more money and start absorbing the excessive liquidity from the economy by increasing its key interest rates (Right now it is just 0.50% per annum means banks can borrow money from the US Government at just 0.50% per annum).

So closely monitor the US Monetary base and the key interest rates. These are the two signs of gold price going down in the future. Till then, buy more and more Gold…!!!