I do my own non-scientific research to determine the future potential upside for gold. Here’s how it works — I tell everyone who will listen that I’m buying gold and silver, not just mining shares and exchange traded funds, but actual physical metal, then gauge their reaction. The more ridicule I get, the bigger the potential upside remaining in the gold bull market. I’ve been doing this for about 18 months and I still don’t know a single other person who has begun to accumulate metal, but I can definitely see the tide turning. People aren’t laughing as much anymore, they still aren’t buying, but they are listening. When owning gold to preserve capital is as common a practice to these ordinary people as it is to me, that will be the appropriate time to start exiting the market.
Last year most people were totally clueless. Today, they find my actions more curious than weird. With interest rates at an all time low, currency valuations in doubt, stocks markets plunging all over the world, real estate markets crashing, and many warning of a pending bubble in government bonds, there is nowhere to hide but precious metals. It’s unlikely more banks will fail, but individual corporations may start to drop like dominoes, possibly even institutions managing the popular exchange traded funds. Gold has zero counter-party risk, it pays no dividend but it can’t go bankrupt. The value may fluctuate but it will never go to nothing. Gold has outlived every stock, every bond, every country, every currency.
The more sophisticated banker types aren’t surprised to hear my argument, even though nobody has done anything about it, I get the distinct impression they’ve heard it all before and buying some physical metal has crossed their mind. Regular people understand the rationale but still regard gold for savings as a foreign idea, but a few ask to see some bullion. Overall, I am convinced the gold market has barely been tapped by ordinary folks. We are so far from a top it would be funny if it weren’t so scary.
I believe the primary obstacle to a further adoption of gold for savings among the general public is a cultural barrier, people have been trained to believe gold is old fashioned or a scam run by bankers. The real scam is dollars, they’re just worthless paper. At least silver has many industrial uses and gold is pretty! I always tell people to buy a few coins or small gold bars, nothing too elaborate, because I am convinced once they have it in their possession and see it in their hands it will become clear. Humans are attracted to gold like bugs are attracted to neon lights. There is a reason gold has survived as money for thousands of years — it works.
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