The News vs. Reality

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Precious Metals Blog

Wednesday, January 23, 2008

The News vs. Reality

I opened the news headline this morning and saw "Gold drops over 1%, recession fears cited" The article starts off with NEW YORK (MarketWatch) -- Gold futures fell sharply on Wednesday, after gaining in the prior session

What a panic? Excuse me? Gold was $650.00 just five short months ago today it is trading at $887.00, The Dow Jones Industrials were just a hair under 14,000 and today we are sitting at 11,752 as a work partner just said "its all in the spin" The news spins gold as some sort of barbaric relic and the reality is gold is a safety net and an insurance policy on your wealth.

Lets examine the cold hard facts. When the dust settles the beloved stock market has now broken all of its moving averages and if it closes below 12,800, which seems to be a forgone conclusion it triggers a bear market as all major moving averages have been broken and momentum has shifted firmly to the negative. This means money managers shift modes from buying dips to selling rallies. So, where will the money go?

When you liquidate a stock you are placing it in cash! Do you want U.S. Dollars today? Do you want paper currency? Not me.

How about the safe haven of bonds? Well major bonds are being downgraded daily and yields are ridiculously low. No thanks.

How about foreign stocks? They led the way down on the stock market dump. As a world economy all countries are somewhat tied to one another. No thanks.

Now lets look at who IS making money and where the wealth currently is. The Middle Eastern Oil Producing Countries (OPEC) have seen oil prices rise ten fold since 2001, China is building an infrastructure and has 1/5th of the worlds population spending money and will continue growing over the next decade, India is flat out booming. What do these countries all have in common? They see extreme value in Gold! Therefore, in a nutshell, I currently only trust Gold in this environment and so should all investors and money managers. Gold maybe at 1980's all time high today but what can you buy today that you could buy at the same price you could 27 years ago?

Gold is a bargain at todays levels. Don't wait, just get your wealth insured, buy gold!

JMC

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