Friday, July 20, 2012

Gold and Silver: Dark Torment?

So here we are, looking at the price movements in gold and silver and wondering if our 'investment' will ever hit a positive return. Asking ourselves if we had listened to the right advice or once again been the victims of forces way out of our control.

There's a lot to be said for the old adage, 'go away in May'. If you are the type to check your portfolios daily, you would probably be depressed and ready for a dose of counselling. Perhaps a 'portfolio' holiday is in order for you? Check again at the end of August.

But there are a few things to remember in your dark torment.

Check out these headlines:

The Gold Price will not Drop to Lower Lows Physical Demand Too Strong.
Eurozone breakup Fears.
US nearing recession. Retail Collapse Accelerates, annual rate of 16%.
Fiscal cliff approaching.
China's economy slowing down.
UBS Issues Hyperinflation Warning For US And UK, Calls It Purely - A Fiscal Phenomenon.
American Cities Going Bankrupt.
Spain Goes From Bad To Worse.
IMF loses all faith in the euro project.
Italy's Monti says serious worry Sicily region may default.

OK, so that's enough bad news. You get the picture. Is there any good news from the markets? Queue wind blowing and tumble weed....

Now read these snippets:

"The LIBOR scandal is further eroding confidence in the global financial system and will lead to safe haven gold demand"

"Hungry people do not stay hungry for long. People suffering from inflation and receiving very low yields on deposits in unsound banks will continue to turn to gold as a store of value."

"Gold bullion is set to benefit from the axing of commission for IFAs and the implementation of the RDR - should be regarded as a game changer - for gold as an investment in the UK, according to the World Gold Council."

"Germany must draw the proper conclusion: either abandon the euro or accept the revolutionary step towards a European superstate."

We could go on, but your time is short.

Just to reiterate what has been said often here, previous fiat money systems have never lasted. All fiat money systems, those backed by nothing but faith, have always reverted to their true values. Zero.

Why? Because, ultimately, you cannot trust people who get a glint of greed in their eye. These people will quickly turn into sociopaths and forget the very morals they may have possesed. The love of money does horrible things to people. Just look at the headlines regarding LIBOR and the corruption at large banks like JP Morgan and noted brokerage firms; even to the highest echelons of power.

This causes the trust and confidence necesssary in our system to begin a slow trickle out. The brown stuff will inevitably hit the fan. The corruption ingrained in the fiat money system will destroy its foundations. The rot that you can just barely smell will become overwhelming.

At these times in history, the only chance that you had to preserve you life's wealth, and maybe intergenerational wealth, was to hold hard assets. The ultimate of these being gold and silver.

Gold in New Zealand dollars: $1969.49 per oz
Previous all-time high: $2311.02 per oz (15 Nov, 2011)

Silver in New Zealand dollars: $33.97 per oz
Previous all-time high: $59.19 per oz (30 Apr, 2011)
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