As long as you can own gold, you can put yourself on your own gold standard by converting paper money to gold. I recommend you do that to some extent. Not all in, but I recommend having 10% of your investable assets in gold for the conservative investor, and maybe 20% for the aggressive investor — no more than that. [Let me explain.]
So writes James Rickards (http://dailyreckoning.com) in edited excerpts from his original article* entitled Your Personal Gold Standard.
[The following article is presented by Lorimer Wilson, editor of www.munKNEE.com and the FREE Market Intelligence Report newsletter (sample here) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]
Rickards goes on to say in further edited (and in some instances paraphrased) excerpts:
If you think that the value of paper money will be in some jeopardy, or confidence in paper money may be lost, one way to protect yourself is by buying gold, and there’s nothing stopping you. The typical rejoinder often is, “What’s the point of owning gold? They’re just going to confiscate it, like Roosevelt did in 1933?” but I find that extremely unlikely.
In 1933 we’d just come through four years of the Great Depression and Roosevelt was new in office…He closed the banks right after he was sworn in and used them as intermediaries to confiscate the gold of a small number of people who had 400-ounce bars in bank vaults. Now, [however, the ownership of gold is] far more dispersed, and there’s far less trust in government. If the government tried to confiscate gold today, there would be various forms of resistance. The government knows this so they wouldn’t issue…[such an] order, because they know it couldn’t be enforced, and it might cause various kinds of civil disobedience or pushback, etc.
As long as you can own gold, you can put yourself on your own gold standard by converting paper money to gold. I recommend you do that to some extent. Not all in, but I recommend having 10% of your investable assets in gold for the conservative investor, and maybe 20% for the aggressive investor — no more than that.
The above numbers are pretty high allocations relative to what people have. Most people own no gold, and all the institutions combined have an allocation to gold of about 1.5%, so even if you take the low end of this range, you’re still nowhere near 10%. In fact, institutions could not double their gold allocation even to 3%. There’s not enough gold in the world — at current prices — to satisfy that demand so it’s got this huge upside associated with it.
Central banks [say they] don’t want to go to a gold standard but if gold is [such] a barbarous relic, if gold has no role in the monetary system, if gold is a “stupid” investment, then why do the Chinese have 5,000 tonnes? Are they stupid? [I think not!]
If some scenarios play out, you are going to see the price of gold go up… a lot and it may go up a lot in a very short period of time. It’s not going to go up 10% per year for seven years and the price doubles. It’s going to chug along sideways, maybe in an upward trend, with a lot of volatility. It will have a kind of a slow grind upward… and then a spike… and then another spike… and then a super-spike. The whole thing could happen in a matter of 90 days — six months at the most.
When that happens, you’re going to have two Americas. You’re going to have an America that [was prepared and an America that] was not prepared. [The former will have some protection from owning some gold bullion while the latter will see their]:
- paper savings wiped out;
- 401(k)s devalued and
- pensions, insurance and annuities devalued
Remember, it’s not just the price of gold going up. It’s like putting a thermometer in a patient, getting a 104-degree temperature and blaming the thermometer. The thermometer’s not to blame; it’s just telling you what’s going on. Likewise, the price of gold is not an economic object or aim in itself; it’s a price signal. It tells you what’s going on in the economy.
Gold at the levels I’m talking about would mean that you’ve now verged into hyperinflation, or something close to it, because nothing happens in isolation. At that point, you have to give more credence to gold. Now you’ve crossed the threshold.
The minute you think of gold and paper money side by side, or having some relationship, you get to these price levels of $7,000-8,000 an ounce. They’re not made up. They’re not there to be provocative. They’re actually the math. Those are the numbers you get when you simply divide the money supply by the amount of gold in the market.
[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]
*http://wallstreetpit.com/100623-your-personal-gold-standard/ (Copyright © 2013 Wall Street Pit)
Is gold undervalued or overvalued?…[Unfortunately,] there’s no good way – and definitely no universally accepted way – to determine a “fair value” for gold. Unlike a stock, gold doesn’t have a price-to-earnings ratio that we can easily compare to the market. [That being said, I offer in this article] a logical, real-world price target. Words: 700 Read More »
An analysis of the ratio between the market capitalization of gold (MCG) and the gross world product (GWP) over the past 63 years suggests that the current price for gold has further to fall and that it would not be wise to begin buying gold until prices have fallen below at least $1100 or $950. Read More »
Below are the four most important factors that influence the price of gold indicators….If you understand and correctly interpret these four indicators, I guarantee you’ll make more intelligent buy/sell decisions. More importantly, you’ll make more profitable ones as well. Read More »
If you want to make rabbit stew, first, you have to catch the rabbit so hopefully, first, we’ll see some concrete signs that a bottom is in before the regurgitation of “Gold is going to $10,000!” starts showing up in a host of new articles pandering for attention. The best way is to decide for yourself…so let us go to the most reliable source, the market, and see what the prices of gold and silver have to say about what everyone else has been saying about them. People have been known to exaggerate, even lie in their “opinions,” but the market never does either. Read More »
An earlier article on gold & silver went viral with almost 30,000 reads on munKNEE.com alone and continues to be read by hundreds of goldbugs daily. Below is an updated chart and analysis suggesting that gold & silver have further to drop before they go parabolic. Take a look and share it with friends. Read More »
So claims Greg Guenthner (http://dailyreckoning.com). He stated that once gold breached $1,350 it would plummet to $1,200 – $1.250. So far, so good, but will his $1,000 – $1,100 price for gold come true?
Roubini expects gold will fall below $1,000/oz, taking prices down to approximately 30% from current levels; a point not seen since 2007. Here’s why. Read More »
Scott Grannis (http://scottgrannis.blogspot.ca) thinks gold could fall to $1000, or even less, as it realigns with other commodity prices.
My answer is no. In fact, depending on their overall allocation, I believe investors should consider trimming their holdings. Here are 4 reasons why that is the case. Read More »
While the US$3000 figure is wildly above most forecasts, which are mostly flat at the current level, UBS global commodity analyst Tom Price said these flat forecasts are based less on informed analysis than on the fact that “people just don’t know what’s going on.” Read More »
That governments will want – and will NEED – much, much higher gold and silver prices in the future is counter intuitive, given that they have done everything within their power to throttle back and to keep a lid on bullion prices. Let me explain why. Words: 1300
What would happen to the market/spot price of gold if central banks around the world diverted their foreign currency reserves – almost $11 trillion’s worth – into gold. Using James Turk’s Gold Money Index the “fair” gold price would be $10,783/ozt. Read More »
$10,000 Gold offers a candid insight into the current state of the economy, the underlying causes of gold’s rising value and why the price of gold will continue climbing to $10,000/ounce and beyond in the years to come. The book contends that intelligent investors have no choice but to invest in this precious metal to stay safe no matter what lies ahead. Read More »
This is not a typical bull market. Gold is not rising in value, but instead, currencies are losing purchasing power against gold and, therefore, gold can rise as high as currencies can fall. Since currencies are falling because of increasing debt, gold can rise as high as government debt can grow. Based on official estimates, America’s debt is projected to reach $23 trillion in 2015 and, if its correlation with the price of gold remains the same, the indicated gold price would be $2,600 per ounce. However, if history is any example, it’s a safe bet that government expenditure estimates will be greatly exceeded, and [this] rising debt will cause the price of gold to rise to $10,000…over the next five years. (Let me explain further.] Words: 1767
Bubbles tend to follow the 80/20 ratio indicated in the Pareto Principle where approximately 80% of the price move occurs in the LAST 20% of the time. That being the case it would appear that gold and silver could conceivably top out around $9,000 per troy ounce and $250/ozt respectively .This is not a prediction of future prices of gold and silver; it is an indication of what could happen in a speculative bubble environment based on the history of previous bubbles. Words: 1280; Charts: 1
Gold is operating on a smaller Contracting Fibonacci Spiral Cycle that is in synch with the larger Contracting Fibonacci Spiral the markets are in. Adding together the sum of parts… the price of gold will move up in price in 2013, 2016, 2018, 2019 and 2020, with each subsequent leg moving less in percentage terms than the prior move. Gold advanced 4 foldish from 1999 until 2008 ($252/ounce to $1046/ounce) suggesting that gold should top out below $4000/troy ounce by the end of January, 2013…[on its way] to $7,000 and $10,000 per troy ounce by 2020. [Let me explain.] Words: 834
There will be a catalyst coming soon, probably some concerted action of money printing between the Fed, IMF and the ECB. That will happen as a result of the economies, worldwide, collapsing….The catalyst could come from anywhere but the money printing will be part of the next move in gold, that’s for certain….[and it] will lead to collapsing currencies, and investors buying gold at any price…I see gold reaching $3,500 to $5,000 in the next 12 to 18 months. Within 3 years, I see the gold price reaching at least $10,000.
The “Pareto principle” – it’s often referred to as the “80-20 rule” – states that 80% of the effects of something come from just 20% of the causes (that is that 80% of people control 20% of the wealth, that 80% of sales come from 20% of your customers, etc.) and a new report by Erste Group, the Austrian investment bank, says this principle can be applied to bull markets as well, including the current bull market in gold, and following this line of thinking, you get an $8,300 price target for gold by the spring of 2015. Words: 285
Lately analyst after analyst (161 at last count) has been climbing on board the golden wagon with prognostications as to what the parabolic peak price for gold will eventually be. That being said, however, only 51 have been bold enough to include the year in which they think their peak price estimate will occur and they are listed below. Take a look at who is projecting what, by when and why. Words: 644