While watching CNBC last Friday and again yesterday I learned the one thing that I should do regarding Syria. Time after time and guest after guest has come on to tell us, “Once the first shot is fired…you should sell all of your gold.” Huh? Really? Why? Did I start buying gold 15 years ago because I knew that we would attack Syria and maybe draw the rest of the world into the action? Should I sell my gold because all of the past “incursions” by the U.S. were “made” for TV and nothing “bad” ever happened?
First off, the current thought process as far as I can tell is that we will strike Syria hard, no one else (the Russians, Iranians, Israelis nor anyone else) will fire a shot and Barack Hussein Obama will stand atop some destroyer or aircraft carrier in the Mediterranean with a sign in the background that says “MISSION ACCOMPLISHED.” This is NOT what is going to happen. The odds that Russia enters this fray is quite high by my estimation, Mr. Putin is no wimp and would not have sent troops and now more warships after giving stern warnings to us not to light the fire. One must also keep in mind that a “short” and surgical strike is NOT what the Federal Reserve needs to “reflate” a deflating system. They need an expensive war that requires a lot of debt which means heavy (heavier) printing and thus not short war.
What if this was to actually get out of control? Should I still have sold my gold because past “wars” resulted in the immediate smack downs of gold and oil…and strength in the dollar? When I say “out of control,” how would (will) it play if the American public sees a destroyer or God forbid an aircraft carrier on fire and sinking? (Would this even be shown to the American public?)
Can’t happen you say (and this is believed by the idiots in Congress who will vote for this war)? The Syrians are armed…armed with the most technological weapons made specifically to hit naval vessels and aircraft, these anti-ship missiles were made by Russia and sold to their ally Syria. Do you think they will not be used? Do you think Russia would not absolutely love to see these systems used after the entire world witnessed the U.S. fire the first shot?
What do think the reaction would be here and abroad? Would the dollar go up? Would investors “panic” and sell their gold because the U.S. was actually retaliated against in kind instead of steamrolling their opponent? Will oil go down in price when Russia fires a shot? Will our stock market go up if Iran or Israel enters the fray? How about our interest rates? Will they go down or up? A better question is “will there be ANY buyers other than the Federal Reserve?”
So we are being told to sell our gold “after the first shots are fired” because “that’s how it has always worked.” I will say to you the most dangerous phrase in investing…”it’s different this time” and explain why it is different now in simple fact and logic. I already mentioned to you that any attack could spread quickly, so unlike attacking Iraq, Afghanistan or Libya…Syria is a real foe with a very BIG best friend. Also, in the past the “finances” of the U.S. were never in serious question as they are today. Foreigners were buyers of dollars and treasuries…today they are sellers. We also never had a “consortium” of nations publicly ticked off at the U.S. and the G-20 meeting in talks to replace the dollar as the world’s reserve currency. I might add that economically we have not been weaker than we are now, just look at our manufacturing base…it’s gone. This unfortunately is a “war” that we need for our economy and to support (through more QE, printing, deficit spending or whatever you’d like to call it) our financial system. In any case, the “world” is a vastly different place today, than it ever was pre 2008 and the U.S. is no longer the only “big bully on the block” either militarily or financially. Just ask yourself how a war is paid for. If the dollar were to get kneecapped then how would we pay for or continue another war?
So, you can listen to CNBC and “trade” or you can keep on stacking. Of course, if you listen to CNBC, follow their advice and “trade” your gold after the first shot is fired, it means that the “gold” is most probably “paper gold” because VERY few physical holders ever trade. Which is sad to say and I apologize for the insult…this would make you doubly foolish…one for listening to the advice of CNBC in the first place and secondly for owning fake “paper gold” and fooling yourself into believing there is even 1 grain of real gold behind it.