There is a professor who begins each new class by asking students to take ten minutes and write down their three major weaknesses.  Most answers are typical college age weaknesses like staying out too late, unorganized, not calling home enough, and not taking school serious enough.  Only after each student verbally confesses one weakness does the professor explain the assignment.  The professor explains most weakness are actually misuses.  He gives examples of what some perceive as unorganized as simply a misuse of time.  When some neglect to take eduction seriously it’s really a misuse of opportunity. The professor takes the entire first class to explain the value of misuse, from marriage, faith, to volunteering, using the lesson to challenge his class.  Today we look at the misuses of gold & silver.

I see gold related misuses daily. Some confuse misuses for mistakes but the majority I see misuse by calculation more than mishap.  One common example I see is a confusion (misuse) between opportunity and greed.  Greed and gold usually end with a catastrophic collision.  Have we entered a time when do-overs are soon to be extinct and misuse will be very costly?  I certainly believe this time is close at hand.  Maybe before we look at common gold related misuses we should ask you a question.  Are you misusing an opportunity to protect your family’s future?

I remember the conversation like it was yesterday when actually it was years ago. Over coffee, a gentleman explained his position to capitalize (by way of borrowing on his personal residence) a sure investment in tech stocks.  His plan was to make a fortune, by way of leverage, but unfortunately his greed outpaced commonsense.  The great bubble burst of the Dot-com industry wiped out his plans, dreams, and home.  If you have quick plans for gold or silver I want you to read this next sentence closely.  Owning gold & silver for short-term opportunities is more risky than not owning at all.

The bubble generation, us, were mislead by non-sustainable earnings all derived from asset bubbles. Do you recall the run to real estate just before the crash of 2006? Millions used leverage to the point of nearly collapsing the banking system.  The true victims of the housing crisis rarely are identified.  They’re our elderly, our savers, and our frugal. The principals that built our economy, heck our country, now penalized for being responsible.  They are now asked to not whine and pay their fare share.

The run to precious metals is no where close to full speed. I caution buyers to not get caught up in the frenzy and confusion soon to hit both gold & silver.  The first step to owning gold/silver is to first educate yourself on what to buy, how much to pay, and where to store it.  The second step is realizing this is a long-term plan that needs very little attention.  The next step is developing an exit strategy.   Yes demand will push gold well beyond its true worth requiring owners to sell before the metal bubble bursts. Until then enjoy the ride, and profit.

Our primary fear here at The Prospector Site might surprise you. We are not afraid of being discredited or afraid of advising folks to buy only to watch metal drop like a rock.  Our primary fear is folks will become so attached to gold’s wealth preservation and profit they’ll refuse to turn loose down the road (years down the road).  There will be a time to release interest in PM and begin buying other severely discounted assets.  Failure to recognize this as fact will be a misuse of gold.

This is our take so tell us yours.  Send questions or comments here.


QUESTION:  Enjoy reading this site very much but something makes little sense to me.  Why spend so much time encouraging readers like me to own gold only to preach selling it soon after?  Maybe I’m missing something but this seems more like a card game than investing?  Do enjoy and agree with most of what you say, thx.

ANSWER: Thanks for the reading our site and thanks for the great question.  This question falls lock step with today’s post (hopefully today’s post answers part of your question).  We must view the economic world around us differently if we want to preserve and prosper.  We have little control of the rules but, unfortunately, the rules are changing.  Think of owning gold like a storm shelter in turbulent times.  A shelter’s purpose is to provide protection until life-threatening weather passes by.  Without this shelter we are vulnerable and unprotected against unknown forces.  But once we enter a shelter we don’t make plans to spend the rest of our lives there, do we?

Gold and silver’s run is no different than a shelter during  vulnerable times.  Substitute inflation and fear for rain and wind.  Like everything else, this too will pass leaving gold/silver overbought and other assets (stocks, real estate, etc) undervalued.  Hope this helps and thanks for asking.

Worth Repeating:

Many of our readers ask how will 2012 affect gold & silver prices. Predictions are difficult to time and our opinion is long-term gold opportunities are all around us.  We ran across an interesting article this morning and it’s a must read for those interested in PM prices for the near future.  Please take a few minutes to read it here (JIM RICKARDS- War with Iran has begun, Gold to break $2000).

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