With Europe teetering on a knife edge gold has once again resumed its role as the custodian of safe – and perhaps sane wealth. Gold prices firmed throughout late New York trading yesterday where it breached the $1700 level. The firm tone prevailed during Asian trading hours this morning, when gold traded to a high of $1719.80 before easing slightly. Behind the move higher has been a surge in purchases of gold ETFs as well as ongoing strong demand for physical bars. The ETFs have seen 16.5 tonnes of new gold buying over the last 2 days which is driving gold higher. It will be interesting to see if the futures traders on COMEX reverse their recent thinking by following suit and drive this market significantly higher.

The speed and nature of the gold price rise seems to suggest to us that gold is back to its old self again and behaving in the manner one might expect, with equities off as gold rallied.  That is to say it is rallying during bouts of heightened economic crisis. The VIX Index is modestly firmer underscoring market concerns, while more worrying Italian 10 year bonds are nudging the 6% level (Greece received its initial bail-out when theirs breached 7% – currently at 25%).

In short – gold is back.

The financial markets are giving a very clear signal. They are saying that they doubt that the 27 EU nations will reach an accord on policies to resolve sovereign debt while stimulating economic growth. The market is looking for “specifics” and not “generalities”. There is a sense that we have heard too much talk and we need clear, cogent and do-able proposals.

At stake is the potential collapse of the Euro and therefore Europe – it’s as simple as that. As such gold which has been behaving more like a risk asset, has reverted to its safe haven role and showed appropriate gains.  Whilst inflation may not be with us at present investors clearly believe it may only be a matter of time. Gold investors clearly recognize that the potential for inflation is now with us and they are buying the physical… put another way, they know that its a bit too late to start buying house insurance after there is the clearest smell of smoke in the air.    

I don’t think any sane person would relish the meltdown of the EU (with its untold consequences) but many will see the current inability of political leaders to gain consensus and support for what may become unpopular political decisions to be endemic to the sort of structure that has been created. That is to say a fragmented decision making process by unelected leaders when these times call for quite the opposite. As such, it is falling to Merkel and Sarkozy to lead the way.

With such epic economic and geo-political themes at play, each with with unknown consequences it is difficult to make forecasts. But the uncertainty that this is creating is almost certain to be gold-friendly and we scope for gold to continue making strong gains from here. As such, we would see the next $100 in gold to be to the upside rather than than the downside. 

NEW YORK (CNNMoney) — Gold officially lost its status as a safe haven last Friday, when the precious metal inked its sharpest drop since 1980.

The recent sell-off in gold prices moved the yellow metal below $1,600 an ounce, a roughly 15% drop over two weeks.

Several traders and industry watchers say gold’s sharp correction was largely due to hedge fund and other money managers amping up their cash holdings in anticipation that investors may start asking for cash back, raising the threat of a flood of redemption requests.

“Whenever you have a market correct as quickly as gold just did, you can assume people are gettingmargin calls,” said Wayne Atwell, managing director at Rodman & Renshaw, who covers the precious metals market.

Since much of the pullback came from money managers selling gold for more cash, analysts and investors say gold will remain volatile but the price shouldn’t fall much farther.

Big hedge funds are getting slaughtered

Although money managers have been selling large swaths of gold, retail investors don’t appear to be looting their gold holdings.

Exchange traded funds like SPDR Gold Shares (GOLD), iShares Gold Trust (IAU), ETFS Gold Trust (SGOL) and iShares Silver Trust (SLV) have not been selling into the broader market, according to Frank McGhee, head precious metals trader at Integrated Brokerage Services.

“To me, that’s one of those on the ground indicators that the run-up isn’t done, and people still want to hold gold,” said McGhee.

Indeed, the creation of these ETFs, which give retail investors easy access to precious metals, have been among the factors fueling gold’s sharp rise over the past decade.

Gold is still up over 95% from the beginning of 2007, when it traded near $800 an ounce. Meanwhile the S&P 500 is down 22% during the same time period.

Among the other reasons gold could retain its luster: central banks have become net buyers.

“Developing markets have been using gold as a way to diversify their holdings,” said Juan Carlos Artigas, investment research manager at the World Gold Council. “Many central banks had many of their foreign reserves based in U.S. dollar, so they had a lot of exposure to whatever is happening in the U.S.”

Whatever happens in Europe, it’s unlikely that the need to diversify holdings will abate, and gold is a relatively safe way for central banks to do this.

Copper prices are getting killed.

Where other metals, such as copper, have primarily industrial applications, gold can serve many masters. It can be used as a currency while also seeing demand from industrial products. (There are flecks of gold in Apple’s (AAPL, Fortune 500) iPhone.) Gold’s hybrid role gives investors more reasons to continue to buy the metal in up and down markets.

“You can walk into a bank anywhere in the world with gold and get any currency in the world,” said George Gero, a senior vice president at RBC Wealth Management. “Gold maintains its purchasing power, but this volatility is unprecedented.”

Even if gold continues to move up, analysts say that volatility — in all markets — is here to stay.  

Following yet another barrage of negative information in the fragile U.S. economy the Fed has pledged to do whatever they can to get things moving again.  Their latest salvo, an attempt to lower long term interest rates, has given commodity bulls an opportunity to lock in profits and prepare for the next run up in prices.  The Fed hopes that by opening the money faucet they can avoid a prolonged deflationary period and kick start the economy.  Experts say that while there will be negative pressure on commodities in the short term that path that the Fed has taken will force those same commodities upward as inflation takes hold.  Additionally, the problems in several European countries, most notably Greece, have the potential to spread even more uncertainty into the U.S. economy. Rare coin investors seem to be the lucky group not sweating it out, rather, sighing in relief that their holdings aren’t shrinking in value.

Combines two high-potential sets for twice the investment power.

The 8 Piece denominational Type Set combines two main bodies of US Coinage, the 4 Piece Indian Set and 4 Piece Liberty Set, into one powerful investment. And when you’ve acquired a complete 8 Piece Mint Set, you’re 4 coins away from completing the prized 12-coin U.S. Gold Type Set – a complete set of each regular-issue, and their respective varieties, gold coin that circulated in America from 1838 until 1933.

Even though spot gold has dipped and remains volatile, high end rarities are heavily sought after.  Even more common coins of premium quality are showing %15 premium over coins of average quality. While many investors are sweating over the ups and down in other markets keen buyers are searching out the best high end coins they can find. These rare specimens will be the big money makers over the next 5-10 years, while common, more bullion sensitive coins are lighting up the short term.

Laurence Marvin, LA Stock Market Examiner

Government calls decision vindication for the American people

By Steve Roach-Coin World Staff | July 21, 2011 10:55 a.m.

Strength seen in all areas of the rare coin market in Aug. 11 Platinum Night Auction

DALLAS, TX – A unique 1855-S $3 PR64 Cameo NGC, CAC, Ex: Golden Gate Collection, a supreme rarity in the world of numismatics, brought $1,322,500 – along with applause in the auction room – as the top lot of Heritage Auctions’ Aug. 11-12 Signature® U.S. Coin & Platinum Night Auction at the Marriott-Chicago O’Hare (all prices include 15% Buyer’s Premium).

Overall the auction realized more than $31.345 million (not including Post Auction sales), as 5,154 bidders vied for 7,370 lots, translating into an impressive sell-through rate of 91% by total lot value and 95% by total lots.

“These are great results with strong showings in every corner of the market,” said Greg Rohan, President of Auctions. “Collectors are continuing to pursue the top rarities that we gather for each auction and non-traditional buyers are looking to temper their portfolios against the tumult of world financial markets. The combination resulted in final figures that were nothing short of remarkable.”

Directly illustrating the interest across the spectrum of types, a trio of diverse coins rounded out the top quartet of the auction. An 1893-S Morgan Silver Dollar, MS67 NGC, from the Norweb and Jack Lee Collections, and the highest-graded NGC-Certified specimen, took the second spot in the auction with a $546,250 price realized, giving collectors of the ever-popular Morgan Dollars something to cheer about. An 1863 $10 PR65 Deep Cameo PCGS, CAC, the sole finest at PCGS, charmed collectors into several rounds of intense bidding before finishing the auction $299,000 and an historic 1796 $2 1/2 No Stars MS61 PCGS, CAC, the finest that Heritage has offered in three years, realized $276,000.

FORTUNE — After taking a breather there for a few months, gold prices have resumed their seemingly inexorable rise to infinity. Amidst the mayhem of last week, the metal briefly touched $1,800-per-ounce before sliding back to $1,770 as the stock market rebounded. Those “cash-for-gold” signs you used to see only in distressed neighborhoods? Don’t look now, but your mother was probably selling a few sets of earrings last week.

To get a read on things, Fortune caught up with Rachel Benepe, co-manager of the $3.1 billion First Eagle Gold Fund (SGGDX). Along with Abhay Deshpande, Benepe stepped into the very big shoes of Jean-Marie Eveillard when he transitioned to a senior advisor role at the fund in March 2009. And they haven’t tarnished the fund’s reputation yet: Had you invested $10,000 in the fund five years ago—which only requires a minimum of $2,500—you would be sitting on $18,766 today, as opposed to losing money in the S&P 500.

Let’s get right to the point. Are people insane to be buying gold at these levels?

We don’t forecast the price of gold, and that’s because we view it as a hedge. Considered from that perspective, no one can really say if it’s too expensive or not, as long as the price moves for rational reasons. Look at the price changes since Lehman failed in 2008. Every move of gold has happened for a rational reason. We haven’t seen a single move out of context. Last week, there were obvious issues in the U.S. and Europe that kind of came out of left field, and gold hit $1,800. Is someone insane for wanting to protect their portfolio? I don’t think so. Keep in mind, too, that more and more people are becoming aware that it can serve as hedge. That, too, has been driving up the price. But to say it’s mispriced is the wrong way to look at it. It protects your purchasing power. Gold should go up when equities down. It doesn’t matter which way it’s moving, either, as long as it’s happening in a rational way.

Do I sell my rare coins now that gold is so high? NO. Many investors are under the illusion that because gold is at record levels, their U.S. Rare Coins are as well. Gold at record levels actually indicates that it is a buyer’s market in rare coins. Historically rare coins experience their own market highs years after bullion peaks.

Take for example the common $20 Gold Saint Gaudens vs. Gold Bullion. Between 1975 and 1980 gold rose from $133.00 to $850.00 During the same time the Saint Gaudens in MS-65 went from $220.00 to $1,250. As gold started to fall from its peak of $850.00 down to $310.00 by 1982 the Saint Gaudens Shot up, way up. By 1989 it reached its own peak of $4,400.00(while gold was a mere $395.00).

Bottom line; wait for the bullion market to significantly soften before looking to sell your rarities. Gold bullion and rare coins are not attached at the hip. If anything, gold going up helps boost the confidence of buyers looking into rare coins while gold going down boosts the price of rare coins. Take advantage of the fact that the hordes are busy buying gold bullion and neglecting the true rarities.