Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20
China’s ‘Two Sessions’ herald Rebound of Economy - 22nd May 20
Signs Of Long Term Devaluation US Real Estate - 22nd May 20
Reading the Tea Leaves of Gold’s Upcoming Move - 22nd May 20
Gold, Silver, Mining Stocks Teeter On The Brink Of A Breakout - 21st May 20
Another Bank Bailout Under Cover of a Virus - 21st May 20
Do No Credit Check Loans Online Instant Approval Options Actually Exist? - 21st May 20
An Eye-Opening Perspective: Emerging Markets and Epidemics - 21st May 20
US Housing Market Covid-19 Crisis - 21st May 20
The Coronavirus Just Hit the “Fast-Forward” Button on These Three Industries - 21st May 20
AMD Zen 3 Ryzen 9 4950x Intel Destroying 24 core 48 thread Processor? - 21st May 20
Dow Stock Market Trend Analysis and Forecast - 20th May 20
The Credit Markets Gave Their Nod to the S&P 500 Upswing - 20th May 20
Where to get proper HGH treatment in USA - 20th May 20
Silver Is Ensured A Prosperous 2020 Thanks To The Fed - 20th May 20
It’s Not Only Palladium That You Better Listen To - 20th May 20
DJIA Stock Market Technical Trend Analysis - 19th May 20
US Real Estate Showing Signs Of Covid19 Collateral Damage - 19th May 20
Gold Stocks Fundamental Indicators - 19th May 20
Why This Wave is Usually a Market Downturn's Most Wicked - 19th May 20
Gold Mining Stocks Flip from Losses to 5x Leveraged Gains! - 19th May 20
Silver Price Begins To Accelerate Higher Faster Than Gold - 19th May 20
Gold Will Soar Soon; World Now Faces 'Monetary Armageddon' - 19th May 20
Gold Mining Stocks Fundamentals - 18th May 20
Why the Largest Cyberattack in History Will Happen Within Six Months - 18th May 20
New AMD Ryzen 4900x and 4950x Zen3 4th Gen Processors Clock Speed and Cores Specs - 18th May 20
Learn How to Play the Violin, Kids Activities and Learning During Lockdown - 18th May 20
The Great Economy Reopening Gamble - 17th May 20
Powell Sends a Message With Love for Gold - 17th May 20
An Economic Renaissance Emerges – Stock Market Look Out Below - 17th May 20
Learn more about the UK Casino Self-exclusion - 17th May 20
Will Stocks Lead the Way Lower for Gold Miners? - 15th May 20
Are Small-Cap Stocks (Russell 2k) Headed For A Double Dip? - 15th May 20
Coronavirus Will Wipe Out These Three Industries for Good - 15th May 20
Gold and Silver: As We Go from Deflation to Hyperinflation - 15th May 20

Market Oracle FREE Newsletter


Gold Worship and Donuts

Commodities / Gold and Silver 2011 Jul 31, 2011 - 03:06 AM GMT

By: Ned_W_Schmidt


This week markets have taken two prices to new highs: donuts and Gold. One is eaten. Other is now worshiped. Which should be our choice for today? At today's prices, donuts may be better choice.

For those wondering why donuts came to mind, Dunkin' Brands stock(US: DNKN) came to the market this week. First day pop was almost 50%. At the same time, $Gold was pushed to a record high. At that same time as anticipating the U.S. government defaulting, investors are buying donuts?

On this topic we note that the world champion donut eater is Canada. No nation consumes more donuts per capita, or has more donut shops per person. With Summer only a three-day weekend, donut shops are certainly more practical than swimming pools. They also own a lot of Gold.

Question that investor must address today is whether or not to convert $Gold, at more than $1.600, to donuts, or to continue worshiping the grand metal. Note what is excluded from this set of choices. Buying Gold at this price is a bet that the U.S. government will default on its debt, and the U.S. dollar will plunge in value. Both of those expectations may simply be another example of the madness of crowds.

In the panic induced discussion of the U.S. debt situation what is being ignored is the very positive development that it represents. The Obama regime, and its minions in Congress, lost the last election, big time. When one loses an election, one does not dictate policy. Rather, one accepts the terms offered. U.S. House of Representatives is in the process of changing policy, altering the trajectory of U.S. government spending. This development is an incredibly positive event. One that should be applauded, unless one is eating at the public trough or receiving money in exchange for votes.

Pundits, many of whom previously recommended investing in internet stocks and mortgages, are telling us with near certainty that the U.S. government will default on its debt and the dollar will collapse. Suspect that a week from now those ideas will be gathering dust. Alternative scenarios do exist. As a consequence of this madness of crowds, those that ignored Gold a thousand dollars lower are scrambling to buy Gold, without regard for the price. Buying hurricane insurance when the flag is flying means dramatically over paying for that insurance.

This week $Gold touched about 6.4 times the last major low. That level of valuation is equivalent of a yellow card in each of the referee's hands. Any price action above that level should give investors reason to know where the exit doors might be. The time to use those doors has probably not arrived, given the dysfunctional government still in power in the U.S. But, every investor should know the location of their personal door.

We bring no charts to you this week. At current price levels, and with a near mob mentality on the U.S. debt situation, no charts are needed. No technical analysis, good, bad, or mythical, is likely necessary. After twenty years of success for Gold and failure for Keynesianism, t he verdict has been delivered: Gold 1 Keynesianism 0

Investors should be considering several possible actions. $Silver is over priced, and has experienced a bear market rally of ~20%. It is clearly demonstrating that it is not a store of value in times of uncertainty. At today's price, Silver is again a strong sale. Alternatives for those proceeds to consider are Rhodium and Chinese Renminbi deposit accounts.

Be careful next week, running with the mob puts one at risk of being gored!

By Ned W Schmidt CFA, CEBS

Copyright © 2011 Ned W. Schmidt - All Rights Reserved

GOLD THOUGHTS come from Ned W. Schmidt,CFA,CEBS, publisher of The Value View Gold Report , monthly, and Trading Thoughts , weekly. To receive copies of recent reports, go to

Ned W Schmidt Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


do NutZ
07 Aug 11, 08:51

It is not the worry of default, butt downgrades, soaring unpayable debt, donuts are a bad business. If one does go into dunkin he will find donuts that no longer taste good; have very little toppings, are dry and the people behind the counter are all from an alien land. Europe will not help; they don't even serve milk at dunkins in Europe - what is that all about. Keep the Colour; by a donut or 2 but for god sakes skip the stock purchase.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules