We’ve said it for a LONG time…
The price of gold revolves heavily around fear and uncertainty. Understanding this will help you be able to predict what the price of gold is tomorrow. That’s right; you can own the crystal ball. But for the “average person” they’re not out buying massive amounts of gold bars. They’re simply trying to put food on the table and pay the bills. So should THEY understand the markets and gold? Of course they should but we also think they can benefit from a “gold bubble”.
“How did you go bankrupt?” Bill asked.
“Two ways,” Mike said. “Gradually and then suddenly.”
The dialogue above is from Ernest Hemingway’s 1926 novel, The Sun Also Rises.
It’s often attributed to Mark Twain or F. Scott Fitzgerald, or misquoted as something like “At first you go bankrupt slowly, then all at once.” But the theme is the same.
Nations go bankrupt in the same way. Banking collapses occur in the same way. Currency crises strike in the same way. They all happen gradually… and then suddenly. Sometimes overnight.
Remember the emergency government meetings in 2008?
Read the Fed transcripts here.
It’s REALLY difficult to get people to understand just how a “crisis” can impact them. Whether it’s a storm, financial crisis, fire, or anything that is considered a crisis, they usually happen quickly with little time to react. One way investors react is to RUN to certain products (investments) causing bubbles… or run away from them causing the bubble to pop. It’s critical you understand how the human mind reacts and reacts with emotions.
Gold is insurance.
When stock prices plunge, where do investors run?
When bonds tank, they run to?
When the dollar starts to crash?
The answer is simple, many run to gold for safety, security, and protection of assets.
Really, gold has become an insurance policy you can own or sell at any time.
Imagine if you could buy homeowners insurance in 30 seconds.
Feel a storm coming, click the button.
Smell smoke in the house, click the button, buy insurance then get out.
Gold is about the same. Own it as you see fit, just understand that the “insurance rates” go up as the storms approach. While the government would sue insurance companies for price gouging for doing this, gold is the purest form of free market capitalism that exists in the world today.(Watch video below)
Watch the scales.
You can see this throughout history and it really won’t change for some time to come. When things get bad, gold goes up. Not 100% of the time, but for the most part. If it’s storming and raining, the pool is going to rise. If stocks go down, gold goes up. Again, not every single day follows this rule but it’s fairly close. Look at the chart below comparing the DOW to GOLD. It’s important to do this view at reasonable increments and not try LONG term charts. The DOW is blue and gold in red for 6 months.
The biggest storm is still coming.
The biggest bubble of all is coming… GOLD
I have long ‘preached’ that people should read the book “Aftershock”. In my LIVE shows I talk about the extreme importance of understanding bubbles. Throughout history they have controlled or guided all countries economic futures, yes even back to 1621. BUBBLES… will control the next 20 years in our economy very strongly. (i.e. : the housing bubble of 2008)
At this time we face $20 TRILLION in debt. (I hate tying zeros)
Now I know that $600 million sounds like a lot of money… what could you do with that over your LIFETIME? But that is about what the US pays EVERY day (25 million an hour) in just interest on the debt and it’s only going to go up. BIG TIME.
The county’s debt crisis is looming and about to come to an awakening. Consumer debt will add to this crisis and if the world moves forward with replacing the US dollar as the standard… it’s nuclear bomb time for our economy.
This my friends… is when you will see a “gold bubble” like the world has never seen a bubble. $2000 dollar an ounce gold will seem cheap.
Become a gold farmer.
My advice is different than most for the “AVERAGE” person. Don’t invest a lot in gold. It’s just too expensive for the average guy to REALLY protect their future. (If you have 100’s of 1000’s of dollars to invest… you’re reading the wrong article anyways.) And… if you don’t have much to invest, it won’t protect you for very long.
Instead, invest in your MIND… and learn to prospect or gold mine. Invest in equipment you can afford, even if it’s just a pan and shovel, and work on finding land to work. The land might be land you buy, land you lease, claims you buy, or public lands that produce. It’s the difference between storing food and growing food. One runs out, the other continually pays. These things are fairly reasonable right now, but if the BIG gold bubble hits, prices will sky rocket just like they did during the old gold rush days.
Over the years I have received a TON of emails from people telling me how they actually make / made a living from small scale mining and prospecting. My favorite was from a laid off construction worker. He packed up everything, moved out west, and was camping out most days near his claim. During the last gold spike was making $200 – $300 a day digging with a shovel and running a highbanker. Not bad work if you can get it.
In the end… gold prospecting is FUN… good exercise… and a healthy activity for the family to enjoy. But it also can become a valuable asset in times of need. A few grams a day prospecting could make a big difference to many. Think wisely and use some forethought. You’ll start to “get it”. In the meantime, get off the sofa, turn off the TV and go play in the dirt. While you may never find your fortunes, you’ll be better off for it.
Video David Wiedemer via MONEX