There are two distinct mindsets that exist among gold owners. Individuals owning paper gold are polar opposites in their reasoning from those holding physical gold. One sees gold merely as an investment, while the other views gold as physical insurance. Both are looking to secure their wealth, just from different perspectives. One believes that “everything is cyclical” and if they wait long enough, things may work out. Truthfully, this concept offers little assurance to those trusting in paper assets.
Over the past several months, we’ve seen evidence of this distinction with the alarming panic displayed by those individuals owning paper gold. The first and last thought of their day is, “Sell it! Gold is finished!” On the other hand, physical gold owners are continuing to buy more, hedging their wealth. They don’t subscribe to the “cyclical” belief and no longer trust that our current economic system is sustainable.
When we see world banks including our own Federal Reserve printing money without end, it gives clear indication that the system is broken. Have you noticed that every time the Fed even hints at restricting the money supply, Wall Street shakes uncontrollably at the knees? Magically, when the Fed announces, “we are coming to your rescue”, Wall Street springs to life, so to speak. Could it be that Wall Street, like Washington, knows that without Fed assistance, the “good times” aren’t so good? Is there a chance that misguided monetary policies will come back to haunt us? If true math is still true math, that answer would be a resounding yes.
Been grocery shopping lately? Have you noticed the prices? History tells us that the price of gold should follow the same course. Printing money and depreciating fiat currency go hand in hand. As the dollar goes one direction, gold ultimately goes the other. Will we see a total collapse of the U.S. dollar? Will we lose reserve currency status? Will China back their currency with gold to become the new “bully” on the block? We’ll just have to wait and see. What we do know is nothing replaces tangible assets in times of economic turmoil. How safe is your wealth?