Boy, have you noticed how misinformation is the new media normal? Not a day passes without some Talking Head leveraging a month or three of economic improvement as a road to recovery. No wonder the masses find themselves confused, confused with gold, confused with stocks, confused politically, and more importantly, confused who to believe. I have no way of knowing the percentage but willing to bet 80% of all economic predictions as inaccurate. Why? Because most promoting recovery have a vested interest in folks like you reacting by borrowing, spending, and buying what most don’t need. Don’t get me wrong, I’m all about strong stable economies but only when free market based and not deficit driven. Nevertheless, this type of inconsistency encourages many to a relatively unknown asset like PM (precious metals).
I want to lead off with a very brave PM statement on my part. I have no idea how high (in USDs) gold or silver will rise in 2012. If both metals follow ten-year averages, gold should finish 2012 around $1845 (oz) and silver around $34 (oz), respectively. If things become volatile in Iran, and if oil exports decline, these PM numbers could be low, very low. A cool feature of gold and silver is how each performs, or reacts, to oil and inflation. I can’t predict PM values since I can’t predict inflationary influences or oil volatility. Gold will do what it must to form equilibrium of value, regardless of dollar value. This confuses most savers today, most want to hear a sharp-dressed expert analyze percentages with confidence and trust. After all, like real estate of the past, most ballooning assets grew vertically unabated.
But gold and now silver too, are not typical investment assets. Both metals are now worldwide currencies. As currencies, both metals are beginning to find favor just as all fiat currencies print themselves worthless. This is why your stash of gold/silver’s buying power grows; this has little to do with investment demand. Many of us new to PM fret over how much to buy or how much to pay not realizing today’s prices are relatively insignificant over longer term. Sure, each should take advantage of PM dips but ultimately the goal is to own real money in a time of massive monetary execution. We can debate junk silver to legal tender, gold bullion to Pre 1933 coins, but at day’s end it’s all about ownership!
I want to go back to today’s economic inaccuracies for a moment. Just last week the media repeated a wheelbarrow full of misrepresentations that I want to rebut.
(Reuters) – Federal Reserve Chairman Ben Bernanke on Tuesday took aim at proponents of the gold standard, saying that such a system handicaps the government’s ability to address economic conditions. More.
PROSPECTOR REBUTTAL: This is true. This is also the primary reason to anchor monetary actions to something like gold. This is the only thing “real” offering those elected fiscal restraint. But very few media minded question such fact, very alarming.
WASHINGTON (Reuters) – The battered housing market looks to be on the mend as buyers make a tentative return and house prices stabilize. More
PROSPECTOR REBUTTAL: I wish we each had an ounce of gold for each time our media projects another housing recovery. The facts, our mortgage industry are 90% dependent on Fannie/Freddie along with artificially low-interest rates. The problem arises when we expose the billions Fannie/Freddie bleeds all while taxpayers remain indebted to an industry unwilling to allow our housing industry to bottom. Housing is no where close to “on the mend” or about to “stabilize”. Please don’t get me wrong here, I’m a huge fan of residential real estate and would much rather own a condo next to the beach than a stack of silver coins, but.
This is more important than some realize, here is why. Whether we realize or not, we make financial decisions according to how optimistically we view or future. We scale back personal spending if things look dire and the opposite if things look promising, this is the American way. We re-elect politicians if our future looks promising and we vote out politicians if it doesn’t. One party portrays gloom while the other promotes opportunity and recovery. Not sure which represents fact?
WHAT DO YOU THINK? PASS YOUR COMMENTS & QUESTIONS ALONG RIGHT HERE.
COMMENTS & QUESTIONS:
Buying gold coins right now could be the smartest decision you ever make during this economic crisis. There is a huge economic storm that is coming to a head, and people holding on to dollar related assets are going to suffer the most. There is a lot of hype out there about a recovery in the stock market. Let me just say one thing for sure. There is NO recovery! You can not have a jobless recovery.
PROSPECTOR: Thanks, I couldn’t have said it better. The recovery bandwagon is politically motivated and here is how I know this as fact. Not one promoting recovery warned prior to the economic collapse of 2008. Why? Because focus is more about appeasement than what is best for our children’s future. You’re also correct in recommending gold coins and let me take it one step further, if I may. Why not buy gold coins as close to spot all while paying as low a premium as possible? Remember, we are not collectors, not most of us at least, and our primary interest is within the metal itself. Your point about dollar related assets is also “spot on”. Thanks for the insight, and comment.
The gold price Australia is high at the moment. It will be a great time to sell your gold on the market!
PROSPECTOR: Okay, I’m willing to pass on a shameless plug for our friends Down Under. My question, why sell gold just because the market is high? I understand this as good for your business but scrap gold is just as valuable as any, relatively speaking. We often hear readers ask about selling scrap metal to buy bullion but I don’t necessarily see the benefit. Gold is gold, even scrap gold. Thanks for commenting and you’re welcome for the plug.