In a world based on fake paper and fake electronic money as well as fake asset values, the real significance of gold has got lost. With endless credit expansion and money printing, all asset prices have exploded and investors have made fake profits that seem real. But the imminent secular downturn of debt and asset markets, as well as the world economy, will reveal how unreal these profits were as 90% or more of all the paper wealth in the world will go up in smoke. So investors should now prepare for the biggest wealth destruction in history and also the biggest wealth transfer.
GOLD IS NOT AN INVESTMENT
Gold is not an investment, it is the only money that has ever survived throughout history. So anyone who just buys gold to make speculative profits does not understand the significance of gold. For 5000 years gold has been a medium of exchange and a store of value. These attributes are unlikely to change in the foreseeable future as it is a tradition based on sound values and principles which has lasted for millennia.
Having invested important amounts into gold for clients and ourselves at the beginning of 2002, at $300 per ounce, not once since then have we had any concern that this bull market is over. In the late 1990s, when gold was totally forgotten as well as unloved and undervalued, it was clear to me that buying gold would be an extremely low risk.
GOVERNMENTS GUARANTEE RISE OF GOLD
As a matter of fact, gold is always low risk to hold, whenever you buy it. Because governments and central banks give a permanent guarantee to underwrite the gold price. They do this by continuously issuing credit and printing money which guarantees that over time the gold price will always go up, measured in fiat or paper money. As a result, governments also guarantee that paper money will always be debased until it reaches zero, as it has throughout history.
PAPER MONEY EVENTUALLY REACHES ITS INTRINSIC VALUE – ZERO
Voltaire 1729
Therefore, anyone who buys gold will know that he can’t lose as long as he has patience and holds it for the right reasons. For the people who buy gold for speculation, many will buy high and sell low. Very few, except for the wealth preservationists, looked at gold in 2000 or 2002. But as gold doubled to $600 in 2006 and then doubled again to $1,200 in 2009-10, more and more people bought the yellow metal. The best time to buy anything is when nobody is interested and the media don’t talk about it. But the average investor will wait until something has gone up substantially and becomes headline news.
WITHOUT A GOLD STANDARD DEBT AND GOLD WILL SURGE
But whether you bought gold at $300 or $1,900, the good news is that it doesn’t matter. Because governments around the world will continue to guarantee that your gold will rise dramatically in value in relation to paper money.
