The Fundamental Case for Gold Remains Rock Solid
From the Casey Daily Dispatch, Jan. 2, 2012
Gold demand from investment and central banks grew tremendously last year. Further, the geography of gold buying was widespread, with big purchases coming from Europe during the initial bouts of their crisis and Japan after the Fukushima accident. Small investors and monetary authorities alike purchased gold due to economic, financial, monetary, and political concerns. Quite frankly, we see none of these factors changing anytime soon.

Further, many countries continue to debase their currencies at phenomenal rates (see Bud Conrad's related article below). While US Treasuries may be a good temporary parking spot for cash, don't kid yourself about what's behind it all: nothing. The dollar is a fiat currency, no more. A true safe haven is something that cannot be debased, devalued, or destroyed by any government. After accounting for inflation, your dollars are worth less every year.

The reasons for gold's bull market aren't going away anytime soon. Make sure you have enough exposure to make a material difference to your portfolio.

The Gold Price Will Continue To Be Volatile
The average annual gold price in 2011 was $1,571.50/ounce, which was 28% higher than the prior year's average. As we outlined in our last article about gold corrections, the average retreat in gold since 2001 (of those greater than 5%) is 12.5%. Declines of this degree are normal. They will happen again. Thus, expected price behavior leads us to get excited when gold and related stocks go on sale, not depressed about the dips.

If you buy gold during corrections, your gain by the end of the year will be higher than the annual advance.