Europe...Again

Chris Poindexter
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Posted: Sep 12, 2011 12:01 AM

Watching the situation in Greece is like watching a long, predictable stage play.  You already know how it’s going to end and it’s painful wading through lines you’ve heard a hundred times until we get there.  You find yourself wishing for a cosmic fast forward button. 

The situation in Europe is dire from an economic standpoint, but it’s not exactly a headline.  We’ve seen this coming for months and the situation isn’t that much worse this month than it’s been the last year. 

Last week gold prices corrected early in the week, which got the talking heads on the financial channels talking about the end of the gold bubble.  Oddly they were much less vocal as prices recovered to the middle of the weekly range and remained solidly above $1,800.  What bubble was that again? 

The ongoing Euro-zone follies seem to have more impact on the equities markets than precious metals as the gold market has been factoring in European instability for the better part of a year. 

As I mention regularly, buying gold and silver as a short-term speculative investment is a really bad idea unless you’re a professional, and even then I think you could do better in other commodities.  You buy gold and silver to preserve your wealth on the assumption that precious metals will maintain some relative value regardless of what happens to paper fiat currency. 

I’m well aware that gold has very few industrial uses, as far as I can tell gold has had very few industrial uses since the beginning of time.  Yet, as long as human beings have been writing things down, gold has maintained its relative value as a medium of exchange. 

When investing in gold and silver a long-term disciplined investment scheme, buying a small amount every month over a long period of time, will serve you well. 

Everyone has that crazy relative who was buying gold and silver all through the 80s and early 90s, when the price of gold moved up and down around $400 an ounce.  For 20 years those investments went nowhere, yet today your crazy relative and the 20 cats living with them are sitting on a fortune. 

Today prices are higher than they’ve ever been and even the disciplined gold buyers are starting to wonder if prices will fall.  Probably, but what difference does it make?  If gold prices go down it will be because other investments like the stock market are improving and world governments suddenly started practicing sane monetary policy.  How bad is that then if, in that situation, the relative value of your gold holdings correct to the new and better reality?  If gold goes down it’s because your cash is worth more. 

As hard as I try, I just can’t seem to spin that into a negative. 

Chris Poindexter, Senior Writer, National Gold Group, Inc


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