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 no-brainer.
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 bubbles
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
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% of my
net assets in physical gold in my physical possession at any given time.
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 government or another to be money.
May you own gold, live long, and prosper.
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.