Thursday, November 8, 2012

When 1700 Dollar Gold Was a Bargain

How can you profit from the absolute certainty that Obama +4 more... will be a certain disaster?

This morning I was listening to Ron Paul on Bloomberg TV wherein Dr. Paul says we are already over the fiscal cliff.

When politicians tell the truth, often it has dire consequences. This was proven out when Mitt Romney lost Michigan, a state where his father was Governor. Romney lost Michigan and the union vote when he told an inconvenient truth.

Government had no business bailing out the auto industry and he wouldn't have. That kind of truth telling will get you no where with a voting electorate incapable of seeing any picture beyond their own.
Obama exploits idiots like that, in this case, a whole state full of them.

That's how government fucks up. It sets bad precedent. Once you set a bad precedent, there is no going back. Setting bad precedent occurs in a family with multiple children or managing a business with several employees. Thus when you bail out one automaker, they will all come calling and you will be bailing all of them out- forever.

Two or three years ago, I realized for the first time that we were structurally cooked. Kaput. Done with. You can't have a healthy economy with 50 million jobs lost. There is no money to buy anything, nobody to pay taxes. But most importantly- those jobs are never coming back. That's a fact. Which leads us to our next fact. If your government cannot quit spending, then it cannot quit taxing. If it has nobody to tax, then it will simply borrow the money. Or print it- hoping for some miraculous recovery. The argument gets circular and ends when you realize the jobs are not coming back. That's when I started buying gold at 1400, silver at 26.00. That was about 4 trillion dollars ago.

Ok, so I've only made 20% on my gold and 20% on my silver. Over three years that is 7% annualized- with no taxes. I repeat no taxes. And when I sell it- no taxes. How much did you make with your CD since 2009?

Try doing that with options, futures, or stocks. Make 10% a year but pay a 15% capital gains tax. Which is the better investment? Most importantly, which has the greater risk to your principal?

I am buying more gold at 1700 although I have to say- the real steal is silver at 31.00. I have reasonable expectations built in. I am just trying to make 7% a year. One hundred grand worth of principal will make you 7000 a year or 28k for the next four years. Tax free. In addition to your principal being perfectly safe, you have the added bonus of being properly positioned when precious metals go fully supernova. This happens when the other 99% of the world figure out what I figured out 2 or 3 years ago. There is no solution and no miracle that won't come with a ton of pain.

Sometimes you just have to trust reality, shut your eyes, and shove your money in. One last thing.

Have a core holding. Let's say 6 ounces of gold, 250 oz. of silver- that amount never gets sold. As you accumulate more, do not be afraid to sell some of your excess holdings at lofty levels and then pick it back up again after the banking cartel beats the price down. Those swings are virtually guaranteed. There is nothing wrong with making a little money along the way. This has been the easiest money I have ever made. And it's guaranteed to do nothing but go up for the next 4 years and barring some sort of miracle- probably the rest of my life. So you should probably wade in at some point.

There will come a day, soon, when 1700 dollar gold will look damn cheap. Just as 1000 dollar gold did 3 years ago.


Anonymous said...

I piss and moan about the number of stupid people in the world, and God know there are a lot of them, but all of those stupid people can also be viewed as a blessing in disguise. How so? Consider that stupid people are permitted to vote. Stupid people go on to elect stupid politicians who do stupid things in order to appease the stupid people who elected them. A self-reinforcing circle of stupidity. All of this stupidity plays into the hands of those who can see the writing on the wall and prepare accordingly by stacking. So from a purely selfish point of view, I love stupid people. Really, I would prefer that the state of society and the world were otherwise, but there's no stopping a runaway train wreck. Might as well profit by it.

Anonymous said...

One more thing. The time to sell your PMs is when the powers-that-be stop devaluing the dollar, abide by the constitution or when real interest rates go positive. You may be waiting a while