Unfortunately, for those of us who have “invested” (in reality the word is “saved”) in precious metals, I don’t think that we will get to enjoy them. Let me explain before you get disheartened and decide to sell all your holdings to go buy a “nail gun.”
Many people (including myself for the first 6 or 7 years) bought gold and silver to “get rich,” retire and ride off into the sunset of some deserted island paradise. This is/was a natural thought process in my opinion because gold and silver were so cheap based on all sorts of yardsticks. Yardsticks such as versus the cost of production, versus GDP, national and total debt outstanding, versus equities, money supply(s), you name it…precious metals were cheap, cheap, and cheap (they still are…and maybe even cheaper)!
So naturally, many believed that “investing” in an asset class that had become so unloved (actually hated) was the road to fabulous wealth. Wealth that could be used to travel the world, eat fine foods …and just enjoy life in general. Of course, passing wealth on to future generations was a thought but the immediate lure was to become “wealthy.” Some of the early birds have done well enough for this to be the case. Some of the really aggressive early birds have accumulated enough that they no longer need to work but unless they kept their day jobs, income is not flowing.
So what is it exactly that I’m trying to get at here? Presently, we still live in a world where if you accumulated $5-10 million dollars you can really enjoy life. You can do this because the world is still (sort of) “normal.” You are able to buy whatever goods that you desire, you can travel wherever you’d like and dine like a king or a queen. But…I don’t believe our current “fairy tale” world will continue much longer.
I foresee the arrival of many things “restrictive” such as capital controls, bail ins, passport restrictions, the shortages of many goods and even foods because of trade disruptions. I also believe that “war,” whether outright, financial or “cyber” is definitely in our future. In short, our “world” is going to change. And yes I know, our world is constantly changing but in my opinion…what comes will not be pleasant.
The reason I am writing this piece is because it is clear to me that “they” will not let “us” enjoy the fruits of our willingness to have been early, been bold and different, and recognized “value.” Gold and silver have been completely locked down since the fall of 2011 and been monkey hammered by paper contracts for the past year. This in my opinion has been a last ditch haymaker to get anyone that was “in”…”out” and to scare anyone thinking of entering to think at least twice. This has to some extent worked yet it has also created massive demand from outside of the U.S.
I got to thinking about this because I had a recent conversation with a past client who said to me, “I would have thought 15 years ago when gold was $300 that $1,300 gold would have meant that we ‘won’?” The way I see this is that we have “won” but that the “table” will be purposely kicked over and unless you have $100’s of millions or even billions of $ (in today’s dollars)…life will not be a bed of roses. Don’t get me wrong, you will have wealth and you will have arrived into whatever new system that is set up with wealth…but…”things” will be different.
I do not believe that gold or silver (or ANY market for that matter) will be allowed to trade freely “until they do.” Sounds almost foolish don’t it? “Until they do.” What I am trying to say is that once the markets do trade “freely” it will mean that “control” will have been lost. “Control” as in the chaos that is being hidden in plain sight becomes plain for all to see. I want you to think about this, what exactly would $4,000 gold mean? Or $10,000-$20,000 gold? Or even MUCH higher? It would mean that the world has spun out of control …which also means that life in general will be a dangerous proposition never mind ordering $200 bottles of champagne with your dinner.
What I am trying to do here is to get you to change your mindset from “making money” to “surviving with wealth.” I’ve written about this concept from many angles but never “in your face” like this before. I do not believe that gold or silver will “go up” until it is determined that there is no more to be delivered from West to East. Once this does happen… all bets are off and the table itself will probably be kicked over. There will also necessarily need to be something to “point at.” Some sort of event, whether “real or false” flag will occur because something must be blamed. Without something to blame it cannot be said that …”our policies would have worked if it weren’t for such and such.”
The bottom line I believe is that those with precious metals will not be allowed to feel like “they won” until “winning” doesn’t matter anymore…survival will. Yes, precious metals will be wealth and this wealth will allow you to do some things that others without any wealth will be able to do (like eat), but you will not be “wealthy” in today’s current sense of the word. You may, probably even will, have more purchasing power than currently but I believe that your “options” to spend your wealth will be far more limited than they are today.
Maybe I am wrong in this thought process but I don’t think so. We are on the cusp of something that happens every 200 years or so, the changing of the guard or more specifically the reserve currency. I can envision maybe even up to 20 years of chaos and uncertainty until a “new world order” truly becomes ironed out. Wealth will obviously be a good thing to have, truly “enjoying it” will be whole ‘nother story in my opinion.