Gold broke out of a huge 27 year base in 2007 at just over $800 per ounce. Gold initially traded up to $1,000 per ounce and backed off to $700 per ounce shortly after the breakout. Gold then moved from $700 to $1,900 per ounce in three years. Gold has rallied $600 per ounce in the last year and broke out of a nine-year base. The long term trend is up. Don’t let a pullback from a recent all-time high scare you off. $1,700 or $1,800 in gold means gold is just on sale. The bubble phase in gold is in front of us sometime down the road.
Warren Buffet, perhaps the world’s most esteemed investor, has long been a gold bear who has described investments in gold as an unproductive investment. But all this appears to have changed last week. Buffet reduced his exposure to bank and financial stocks, trading those positions for significant positions in gold, a move that is startling to the entire investment community. While individuals can speculate on how this might reflect outlook on banks, financials, and paper currency, it certainly represents a paradigm shift in investment philosophy for Buffet and Berkshire Hathaway.
Gold is an insurance policy for your portfolio
An expensive home requires a good homeowner’s insurance. A valuable car requires a great automobile insurance policy. A human life demands a big life insurance policy to protect your family’s future. What is used to provide insurance for a nest egg that has taken years to accumulate? Physical gold has provided that portfolio insurance for wealthy families for centuries. As paper assets lose value, gold reflects that by going up in value. Many clients that lost 50% or more during the dotcom crash of 2000 or lost big during the housing crash of 2009 were saved by having the right allocation of physical gold to make up for some or all of those losses. Gold provided the ability to weather the storm until paper assets and real estate came back. It could take longer this time to recover since there is more debt fuel for the fire. We may not recover during your lifetime. Consumer debt, government debt, and corporate debt is looming and ready to implode. We are in a pandemic with a struggling economy. A valuable nest egg with no insurance is just plain laughable.
Gold is a store of value
President Richard Nixon took us off the Gold Standard completely in 1971. The fiat currency experiment was born. Fiat currencies were allowed to float freely against one another. Fiat currencies backed by nothing but debt and a promise. Governments given free rein to print as much money as they want out of thin air. Most of these paper currencies have lost 97–99% of their purchasing power against gold since 1971. The US dollar always buys less sometime in the future. The increase in the gold value reflects the debasement of paper currency. The US dollar is poised to lose much more buying power in the years ahead. The government will print more money, the debt is not fixable, more credit expansion will occur, and bankruptcies are on the way in record numbers. 29 million Americans face eviction soon. Many mortgages are on forbearance plans. You have to be in outer space to think we can fix this situation by just printing money and expanding more credit by. Bankrupt banks and a pathetic Fed can keep the party going for a while. Eventually, the fat lady will sing. It’s not going to be a celebration of monetary policy. The financial system is on fumes. Do you smell it?
Physical Gold has no third party risk
The investor today is faced with an interesting decision. Do I keep all my assets in the financial system? A manipulated paper market at the control of the government and central bankers. All you hear from advisors is that stocks, bonds, cash, and annuities mean you are diversified. These are all paper assets, backed by the US dollar. We see wheelbarrows full of worthless currency. Economics that has suffered from hyperinflation. A toxic US Treasury debt market. Fiat currencies backed by nothing but debt. All you hear is how high Amazon and Apple stock is. Investors are hypnotized daily market moves. Hanging on every CNBC comment. Seriously? Physical gold is not part of the banking or financial system. Gold in your possession held safely carries no third party risk. Kenny Rogers, the late singer, had a famous song. Sing it with me.
You’ve got to know when to hold ’em, Know when to fold ’em, Know when to walk away, And know when to run. You never count your money, When you’re sitting at the table, There’ll be time enough for counting, When the dealings done. Folks the dealing is done. Walk away and run. At least play smaller hands.
Huge moves in markets are made over time. There’s no need to watch the market every day.
Gold will keep your purchasing power. It always has. Even if gold dips, stay the course. Silly investors run away when real estate, stocks, or gold is on sale. Smart investors always see the value. We have just seen a decade of huge stock and real estate gains in dollar terms. With everything going on, this decade could very well belong to gold. Investors will be forced to pay much higher prices to own gold bars and coins down the road. Call Midas Gold Group today to see what’s available to suit your individual needs. Markets pull down to provide that power to move forward. Call a Midas trader today at 480-360-3000 or 805-601-6000. We are open to call M–F 8 am–4 pm PST. Midas Gold Group is the nation’s #1 veteran-owned and operated gold and precious metals dealer with an A+ Better Business Bureau rating. Call a Midas trader today at 480-360-3000 or 805-601-6000.