The Big Gold Sell Off Puzzle

Gold is a very long term fundamental safety net asset, a retirement account if you wish, not a speculative instrument. Gold preserves wealth.

Gold rush

Keep your gold close; maybe not this close!

Extra, extra!!! Big meltdown in the gold market! Some Wall Street pundits are saying the bear is here to stay, and it’s time to sell everything gold-related and look for greener pastures elsewhere, preferably the stock market obviously. Others are claiming this is the buying opportunity of the decade, and it’s time to go “all in.”

Both groups are forgetting to abstract and analyze all aspects and personally I think a third reason is at play. Just like in 2008 here in the States, lots of Europeans are now facing the reality that they have to sell their gold to meet their other financial obligations.

It really goes beyond me that there are still so many conventionalists in the new world economy that listen to a guidance published by Goldman Sachs. Why anybody would listen to those guys after all they’ve been wrong about, at taxpayers’ expense, is beyond me.

Now, I do admit that the European sell off may only be part of the puzzle, but human nature dictates that once a selloff starts pushing investors into panic mode, that negative momentum can seem to take on a life of its own and move asset classes down way beyond reality.

I have always been a proponent of treating gold for what it is, a very long term fundamental safety net asset, a retirement account if you wish, not a speculative instrument. Gold preserves wealth. If you need proof, history is loaded with more or less valid comparisons.

For all the years that I have been encouraging people to buy precious metals, my advice now is to stick with your plan. Buy consistently and try to lower your dollar cost average. The reason why we haven’t collapsed here in the US yet is, because the US dollar, with all its currency debasement is still the most leveraged buy in a world of financial misery, because governments around the world, like ours, are still printing up trillions of dollars’ worth of new currency units in order to try to avoid an inevitable currency crisis. Until now, much of that new paper money is basically just sitting in the financial system. But at some point it will enter into the economy and cause the higher prices for consumer goods I have been pointing at. Consequently we are going to see an enormous amount of asset bubbles, one of them being precious metals and especially gold and silver.

Ad when that happens you’d better have diversified yourself politically and financially, because Executive Order 6102 will see a repeat.

Granted, all investments are dangerously risky these days. There are very few bargains anywhere, in any market, in any country. Governments around the globe are completely out of control and using all their assumed power to rid you of your nest eggs, even your pension funds. For the last decade or so Social Security has been pointed at in terms of unfunded government liabilities, without ever taking real action to work on solutions. Now the US government is eying US Pensionfunds drowning in $2.5 trillion of unfunded liabilities.

On January 17, Bloomberg reported that the US Consumer Financial Protection Bureau is exploring “helping” Americans manage the $19.4 trillion they have in retirement savings. The reason brought forward is to more “fairly” redistribute pensions and privately held retirement funds. If the government goes through with this plan, and I don’t see any reason why they wouldn’t (other Western Governments have already done this so precedence is created), you’ll lose control of any money that’s invested in a US-based retirement fund.

Yes gold still remains high on my asset list, just make sure you are protecting yourself from an increasingly greedy government.

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