I love it when my gold and silver go up and I’m guessing so do you?  It is fulfilling to multiply gold’s new price by ounces owned and see the number rise.  But recently gold holders have had more frown days than smile days as we tally up the dollar value of gold/silver.  We have grown to expect rising numbers and why not since gold has been the one constant climbing asset.  Several reasons contribute to gold’s correction but my point today is maybe gold’s dip is not such a bad thing in the long run?

Gold zoomed from $1500 past $1600 didn’t even stop at $1700 finally peaking just over $1900. Man what a run as investors from all over the world piled into this yellow hunk of safe haven.  Gold blogs boiled over about $2000 gold like it was a done deal.  Some even raised the bar to $2500 gold causing even greater validation to those smart enough to own precious metal.  But do we think 50% gain in less than a year is really realistic?  Can a gain like this sustain itself at this point and time?  Isn’t a slow growth more healthy than a super spike?

I’m certainly not saying gold isn’t worth $2000 per ounce and I’m sure it will reach this point soon. My point is any asset that climbs this quickly will create mini-bubbles as masses jump aboard not for safety sake but by speculation.  These bubbles will, they always do, pop sending an asset back to its proper spot in line.  Gold certainly is no different.  Some of us remember the calamity of 1980 when gold spiked to record levels only to leave new buyers cursing the sight of yellow metal.  Bubbles like this are far more destructive than good at least in my opinion.

The next few weeks will be interesting from a gold/silver standpoint. Certainly private ownership confidence is rattled but big buyers of paper and physical gold seem less shaken by gold’s correction.  Seasoned buyers will take advantage of these dips without question and with little worry.  New buyers will stand on the sidelines and, likely, watch gold step its way closer to $2000.  I have little doubt gold will spike and bubble its way through time until something breaks in the economy.  This break, whatever it is, will prove costly to other assets sending hoards of money into precious metal like no one can imagine.  Now sounds like a good time to take a hard look at gold & silver.

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WORTH REPEATING:

“Gold and silver coins are not ‘investments’, rather they are a safe form of money and an important form of financial insurance that everybody should own,” said O’Byrne. “Bullion coins are like car or health insurance in that you should own them, but hope you never have to use them.”

“Enough gold bullion to pay for a lifetime of expenses will fit in a briefcase … and a 10-ounce bar of silver is no bigger than a pack of cigarettes,” said Jason Whitney, president of US Secure Coins in Lumberton, Texas. Gold and silver won’t spoil either, so don’t require special environments like wine, fine art or rare books, he said.  MARKET WATCH.  READ IT HERE.

Tags: $2000 gold, gold bullion, gold's dip, safe haven, silver

Do you think your ready for $2000 gold?  I’m certainly not and by the end of this post I bet you will agree most of you aren’t either.  Physical gold is speeding toward the $2k door and there is little anyone can do to stop it.  Sure it could dip $200 maybe $300 on the way but mark my words $2k gold is in your near future.  Most of my posts describe the benefits of owning gold but today we look at the underside of expensive gold.  Today we look at why I’m not ready for $2000 gold.

My recent family vacation found us waking early one morning resting so close to the Pacific Ocean we could hear and smell it. As I read the local paper I could hear my wife and kids chatter about making plans for a sun filled day.  But under the chatter I read an article of a middle-aged man who had lost his job, his home, and his dignity all in less than one year.  The man told how humbling it is to be unable to afford a few dollars so his son could go on a school activity.  He told how his wife and daughter lived in a family member’s garage while he and his son lived in his truck.

As I read the article I found myself thinking this is the underside of everything driving gold. We often picture what a life of extreme gold wealth is like not realizing over 90% of folks around us would be under some form of economic distress.  Not wanting to rain on my family’s vacation I hid myself, and shame, somewhere between the classified page and this story I’m describing.  The reality is only a few choices separate me from this man and the same could be said about you.  I could tell from this man’s sincerity he, and his family, will survive this next depression but will learn the difference between wants and needs.

As you read this and as gold works toward $2000 tens of thousands in Somalia have died of starvation from what is now being called the worst famine of our generation. As gold marches on so will starvation as millions realize true inflation and unfortunately countries wanting to help unable to afford to.  Two thousand dollar gold is telling us something and to be honest I don’t want to hear its call.  Gold is saying world currencies are abused to the point of worthless and the US Dollar leads the charge.  Like refugees, desperation sends currencies world-wide into one of the only safe havens still available, GOLD.

$2000 gold means more unrest like we are seeing across London, Greece, Egypt, etc.  $2000 gold means less employed, more homeless, more failed businesses, more school closings, less law enforcement, and no doubt more crime. More identity theft, less fresh vegetables, and higher prices of commodities like milk, grain, and meat.  It’s easy for gold holders to celebrate spikes in gold but the true picture leaves little to celebrate.  Don’t misread me I’m thankful for making a plan to own gold but the thought of family and friends suffering from severe economic decline is hard to accept. These relationships are more precious than my gold.  A wise man once said be careful what you wish for.  I’m not sure I’m ready to share my life with $2000 gold.

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NEWS WORTHY:

“Now the only viable option — I don’t mean to make light of it — is to leave the body at the medical examiner office,” Szykowny said. “After 60 to 90 days they’ll take the body to what’s called a potter’s field and bury it in a numbered grave.”

The state of Illinois has reached a new level of broke. Come Monday, it won’t have enough cash to bury its indigent dead.  NBC CHICAGO  Read it here.

NEWS WORTHY:

It seems like a scene straight from “The Grapes of Wrath,” but this is no Great Depression novel. This story takes place in 2011, and this New Jersey tent city is one of an untold number of such encampments across the United States, where unemployment has reached 9.3 percent and approximately 3.5 million people are likely to be homeless in a given year, according to the most recent estimates by the National Coalition for the Homeless.

“You’re either rich or you’re poor,” he said. “There’s no in-between anymore.”  FOX NEWS.COM  Read it here.

NEWS WORTHY:

“My long-standing forecast, made in a Barron’s interview in October 2003, is that $8,000 per ounce will be reached sometime between 2013-2015,” he told Reuters this week.

“I’ve stayed with that forecast over the years and see no reason to change it.”

The world’s current financial woes are only going to get worse if current policies continue, he believes, meaning the rally in gold prices is unlikely to stop here.

“Politicians and central bankers are making decisions that debase national currencies, and the resulting bad monetary policies they are following are causing the gold price to rise,” he said.  REUTERS  Read it here.

Tags: $2000 gold, economic decline, Great Depression, own gold, physical gold

Few are willing to call it but the facts show the 2011 economy is far from any form of a recovery.  Like a boxer past his prime, many industries are dying regardless of how much tax payer bailout money is thrown away.  The ones willing to accept this change strong enough to divest from dying industries and dying dollars have a much brighter future than ones that don’t.  Today we look over three dying industries and three emerging industries.  Once again, the facts aren’t what we want to hear but they are the truth.  The question, are dying industries stealing your money?

DYING INDUSTRY #1:  WALL STREET replaced with GOLD $ SILVER

WALL STREET OUT

I recently had a lady email me saying she understood the benefits of gold but wanted to invest her savings in something with a long track record like stocks.  I guess 5000 years as real money is not long enough for this investor.  There are two reasons why Wall Street will soon decline and if your savings is here please listen up.  The #1 reason Wall Street is in danger of decline is many stocks are not worth what they sell for, not all of course but many.  Billions in bailouts have created a Wall Street bubble and its collapse will evaporate billions of dollars from hard-working citizens.  The second dagger for Wall Street is greed by exposing new crooks every time we turn on the news.

GOLD & SILVER IN

Gold and silver will see a major part of fleeing Wall Street money for many reasons but none more than boomers protecting a shrinking nest egg.  We recently posted how a majority of our seniors have no hope of ever retiring by admission.  It is difficult for some to believe an asset with a ten-year bull run is an emerging market but the truth is physical gold and silver is cheap compared to not so distant prices.  The next phase of precious metal buyers will find motivation by fear and self-preservation.  Combine this with a limited supply of physical metal and it’s not hard to see why many experts predict $2000 gold soon.

DYING INDUSTRY #2:  NEW CONSTRUCTION OUT & MR FIX-IT IN

NEW CONSTRUCTION OUT

The Prospector Site has posted several examples of residential real estate for sale at 1/3 of replacement cost.  Think about this for a second, why would someone build new when an existing property can be bought 50% to 70% less?  This price decline coupled with huge inventories is playing havoc for all remotely related to new construction.  Case-Shiller Index recently stated our residential housing problems are many years away from improvement.  Those sitting on large inventories or equipment dependent on new developments may want to reconsider, quickly, these positions.

MR FIX-IT IS IN

If you have been a homeowner for anytime then you know stuff around the house needs fixing.  Now I’m a handy guy but anything plumbing or electrical related and my first move is calling a pro.  Regardless of how bad our economy becomes there will be a need for quality service oriented repair companies.  Some contractors will easily slip into this emerging market but others will see it coming only after it’s too late.  Repair type business has many benefits including low overhead, low manpower, and low capital needed.  As we see more owner occupied property move into the rental category the need for repairs will be as large as ever.

DYING INDUSTRY #3:  ENTITLEMENTS OUT & SELF RELIANCE IN

ENTITLEMENTS OUT

The cattle ranching industry has a simple term, and I will paraphrase a little, by saying the source of the milk is dry.  Not only those dependent on entitlements but ones that draw a paycheck dispersing entitlements are at risk.  John Stossel ( see it here) recently reported how a Alabama town cannot pay pensions for retired municipal employees.  Imagine someone telling you thanks for 30 plus years and by the way we have no way to pay your pension.  History will show debt and entitlements broke the back of our current economy with some help from greed and stupidity.  Older or disabled folks will feel this pain the most as entitlements dwindle just as housing, food, and health care cost rise.  The saving grace of community churches, clubs, and organizations will step up just as government entitlements step down.  Your help will be needed.

INDEPENDENCE IN

By definition, independence means a sufficient income for comfortable self-support.  The one thing I love about owning gold and silver is how I usually feel the day’s bad news is pertaining to someone else.  Please don’t take that wrong because I’m all about helping others every way possible, in fact, gold and silver allow this to happen.  A dependence shackles those willing to succumb to a power of control therefore dependent on this power.  Let me give a few examples of how precious metal ownership breaks the shackles of dependency.  Inflation is powerless over gold and silver.  Declining real estate values are powerless over gold and silver.  Government deficits are powerless over gold and silver.  Social Security cut backs, Medicare cutbacks are powerless over gold and silver.  Your local bank closing is powerless over gold and silver.  Are you starting to see the point here?  Independence is the next big trend and the foundation to independence is a safe store of real money.

NEWS WORTHY:

FORBES:  16 Things I Wish I Knew About Money When I Graduated College

12. Never invest in anything you don’t understand. Otherwise, you won’t know what you’re buying; you won’t know when to sell; and you can’t accurately evaluate the advice you’re given.

15. The biggest financial risk you can take is to ignore your money, and do nothing at all.  Read more here.

NEWS WORTHY:

FORBES:  10 Things Not to Do When Going Back on Gold

The lesson is to keep it simple. Properly run, you’ll see the gold standard deliver in huge fashion – in terms of growth, living standards, and the ability of people to save money that will hold its value. Populist results will come from hands-off policy.

It’s getting to be a distinct possibility that relatively soon, the major world currencies will make themselves convertible to gold once again.   Read more here.

NEWS WORTHY:

MARKETWATCH:  Real-estate scam that’s devastating prices

WASHINGTON (MarketWatch) — Question: My neighbor in Palm Springs, Calif., who claims to have millions or more in the bank, let his home with a $1 million mortgage go into foreclosure. A real-estate friend of his bought it from the bank and is renting it back to him. After one year, my neighbor plans to buy it back. It affects me as a homeowner because now we have a home in our community that shows a sale price for $600,000, instead of the current market of $725,000. How do I report such activities? —J. McK.

Question: I am a real-estate broker in San Marino, Calif., that specializes in foreclosure and short-sale properties. Although Bank of America is a client of mine that I regularly represent in such transactions, I am interested in bringing to light an advertising campaign that I have found offensive and, dare I say, even racist? Any idea how we could get these ads some publicity that might make them a little more sensitive to their customers? —P.A.  Read the answer here.

Tags: $2000 gold, dying industries, gold & silver in, owning gold & silver, physical metal, saving grace, self reliance