Now Do You Understand Gold?
If gold were really just a "fear trade" as so many persistently presume, then would it have notched a fresh new nominal high within hours of Europe tossing a trillion-dollar bailout onto their portion of the debt crisis?
If gold were really just a commodity as so many persistently presume, then would it have notched a fresh nominal high even as virtually every commodity dipped lower on the day? Commodities that dropped today include: oil, natural gas, copper, nickel, zinc, tin, lead, cattle, hogs, pork bellies, etc. If you think gold and silver are no different in fundamental nature than any of those items listed above, then today might just be a little confounding for you.
If gold were really just single-currency (USD) hedge as so many persistently presume, then would it have notched a fresh new nominal high even as the U.S. dollar index climbed $0.40 to $84.55?
If gold were really a "barbarous relic" of an abandoned financial structure as so many persistently presume, then would it have notched a fresh new nominal high just as the pundits victoriously proclaimed an end to the risk of European contagion?
If gold were really doomed to collapse before looming deflation and rising interest rates, then would would it have notched a fresh new nominal high even as Europe's horrid economic state threatened prior (mythical) models of global recovery?
If gold were really a poor investment as so many persistently presume, then would the mining share ETFs have appreciated 7% in a single day on a flat day for the equity markets?
If gold bulls were merely a fringe group of irrational wack-jobs as so many persistently (and irrationally) presume, then would they have been consistently 100% correct about the fundamental staying power of this multi-year bull market throughout the last 10 years?
Perhaps now, finally, a larger proportion of investors can begin to understand gold for what it truly is and always has been: the only currency in the world that carries zero counterparty risk, zero debt, zero credit risk, zero risk of devaluation through quantitative easing, a structurally limited supply, and indeed uninterrupted status as the de facto reserve currency of the world.
$1,650 gold comes during the next 12 months, $2,000 gold comes during the next 24 months, and I dare say $3,000 gold is looking increasingly likely to come within the next 36-48 months. It could all happen much faster than that depending upon how the destruction of the bullion banks' naked short positions unfolds. This is one bull market you do not want to miss. If you think it's too late to acquire gold exposure, then I certainly don't want to press anyone into making a move they're uncomfortable with, but please prepare to kick yourself in three years' time.