Image via WikipediaComment of the day by David Pierre
You have heard both of these terms used, probably in the same day and maybe even by the same talking bobblehead on financial TV. Risk on, risk off. "Gold is up because risk is being bought today...Gold is up on safe haven buying...Gold is down because the Dollar is up on safe haven buying...Gold is down blah blah blah".
So which is it really?
First off you need to understand that we live and have lived most of our entire lives in a fiat money system where the governments have decreed their currencies as the only ones that can be used and that these currrencies have absolutely zero value behind them except for the ability of the issuer to tax. These taxes pay interest and (were supposed to) pay down principal. Secondly you need to know that these governments hate Gold because it competes with their fake currencies. This is obviously because the governments can print their currencies at will whereas Gold must actually be mined with a cost of time, labor and capital.
That said, Gold is NOT a risky asset though Washington and Wall St. would like everyone to believe this, they want to keep you in "the system", THEIR SYSTEM!.
In fact, Gold is simply money, real money. It has value because it is a "thing" that best fits the description of money. It has value because it has a cost to produce or obtain, it has value simply because it "is". In today's monetary system Gold is best described as a "safe haven" because ALL of the other currencies are not safe. Back in the old days (prior to 1932 or thereabouts) Gold was not a safe haven, it was simply money. It was "cash".
In the sense that you saw a bear market in stocks or bonds or real estate on the horizon it was a safe haven just as today when a money manager goes to a high "cash" position to avoid a market downturn or panic.
Gold WAS "cash" and "cash" was readily exchangeable into Gold. Bank runs occurred when rumors started that their bank was running out of Gold, not Dollar bills.
If a bank made bad investments in loans or bonds or whatever, they were required to pay in Gold which in turn would spark fears that they were low on Gold!
Gold has always been a safe haven because it was "cash", however in today's world it has taken on a new definition of "safe haven". It's safe haven status now includes safety VERSUS "cash". VERSUS any and ALL paper currencies no matter which one you are using.
"The Money" needs to be replaced with something investors and savers will "trust". THIS will happen because the current system has been abused to the point of collapse and will end as ALL Ponzi schemes have ended.
The MOST IMPORTANT characteristic of "money" in the near term is it's ability to "store value". It is for this reason that savers and investors have for 10+ years running been turning their paper currencies in for Gold, they fear losing their purchasing power.
Gold has not "gone up", it is the global paper currencies that have gone down because of overissuance!
Truly THE most important benefit to purchasing, holding and owning Gold right now is to "make it" through to the next monetary system with your wealth in tact, period! The current monetary system is in it's "death throes", a new one WILL be devised and the easiest, safest and surest way to have a head start in this new system is with a pile of Gold (and Silver). The way to be a "charter member" of the next banking system is to have ownership in the production of both Gold and Silver.
If you understand the most basic of basics (the money), then you understand all that is needed from a financial standpoint.
Gold (and Silver) are nothing more than your "bridge" from this monetary system to the next. Your mining shares because of their operating and financial leverage are what will increase your "current wealth" and make you WEALTHY as and when the next system gets up and running. Hold as much as you can and sell as little as possible to survive until the "revaluation", your true wealth depends on it!
It seems that The Perfect Storm has arrived for gold, with silver right behind it. Kicking the financial can down the road in Europe is hitting the wall … with the monster US financial market problems becoming more glaring by the day. The reasons for owning both precious metals are becoming clearer by the day too.
And what an irony. A visible Muppet host on CNBC spoke of the "crowded" gold trade this morning. Her commentator colleague then said he was short silver. The irony is that both gold and silver are among the least crowded trades ever.
For one, the open interest in both precious metals is light years off their highs. Two, the bullish sentiment indicators are lackluster at best.
And three, there is more talk of the price vulnerability floating around than talk of grandiose higher prices. Most of the market commentary is about the risk of owning gold on the downside.
