Gold is money that maintains its
purchasing power, and for this reason it should be viewed as insurance
against financial calamity and a hedge in case of economic collapse.
When money supplies are inflated, fiat
currencies are devalued and the price of gold goes up. For example, monopoly
money manipulators Bernanke and Draghi announced
the purchase of more tranches of American and European debt in late August
and early September and gold rose $127 an ounce in a two-week period:
During the previous six months, it had
been widely anticipated that Professor Bernanke planned to engage in this
third round of quantitative easing. In the various instances when he did not,
gold precipitously dropped $50 or more immediately after his speech.
Despite mainstream media‘s
promulgation of the idea, gold's inexorable increase in price does not
represent a bubble. The gold price has steadily increased in every major
currency over the last 11 years, and it is now all but certain the metal will
end 2012 higher than it was at year’s end 2011. Precious metals pundits
have predicted this performance for several years now; it seems a veritable
By comparison, examine what happened
with the price of silver in the late winter to mid-spring of 2011; it rose from
less than $27 to nearly $50 an ounce and then immediately collapsed in a
parabolic fall to $32 and change. This is precisely how speculative market
Although silver has traded below $30
most of 2012, it is now at $32 in the aftermath of QE3. Silver is not money;
it is more industrial than precious metal.
We have not seen this sort of volatility
in the gold market since late 1979 to early 1980. In the course of five and a
half months it went from $282 to $850 an ounce and in a classic parabolic
fall, was at $482 two months later. It took nearly 28 years to reach that
lofty level again.
As for the bevy of gold bug speculators
currently predicting that gold will reach $2,500 an ounce by the end of the
year, I can foresee no catalyst to stimulate such an exponential rise.
Regarding their mid-term ideas of gold breaching $5,000, $10,000 or even
$15,000 an ounce, I would opine that if it were to reach those levels within
the next few years, you should own not only gold but a gaggle of guns and an
arsenal of ammo because the world would be in total economic and social collapse.
No matter what price of gold bullion
retailers, newsletter writers, radio pundits, and TV talking heads with
vested interests may promote, please note that financial success with their
respective buyers, subscribers, listeners, and viewers depends on sustaining
an emotional environment of greed, fear, and panic. Some of the older perma-bulls in this crowd have been predicting an
imminent collapse of the world’s financial system since the late 1970s
and early 1980s. This Chicken Little notion reminds me of the multitude of
born-again doomsday prophets predicting the end of the world, a la Monty
Python’s “Life of Brian”.
Personally, I prefer the Boy Scout way
and am hopefully prepared for whatever may come; i.e., I hold a minimum of 10
per cent of my net assets in physical gold in my physical possession at any
For me, gold is neither an investment
nor a speculation. I do not trade gold; I hoard gold. Gold is my insurance
policy against financial calamity and my hedge against economic collapse.
I think that every smart investor should
have a portion of his net assets in physical gold. Gold is money. Everything
else is just a constantly devaluing piece of fiat paper or a keyboard stroke
that is deemed by one insolvent governmentor
another to be money.
May you own gold, live long, and
Ciao for now,
The Mercenary Geologist Michael S. “Mickey” Fulp is a
Certified Professional Geologist with a B.Sc. Earth Sciences with honor from
the University of Tulsa, and M.Sc. Geology from the University of New Mexico.
Mickey has 30 years experience as an exploration geologist searching for
economic deposits of base and precious metals, industrial minerals, coal,
uranium, and water in North and South America and China.
Mickey has worked for junior explorers, major mining companies, private
companies, and investors as a consulting economic geologist for the past 22
years, specializing in geological mapping and property evaluation. In
addition to Mickey’s professional credentials and experience, he is
high-altitude proficient and is bilingual in English and Spanish. From 2003
to 2006, Mickey made four outcrop ore discoveries in Peru, Nevada, Chile, and
Mickey is well known throughout the mining and exploration community for his
ongoing work as an analyst for public and private companies, investment
funds, newsletter and website writers, private investors, and brokers.