You never know unless you ask – so I’m asking.

Buy Gold Buy SilverHere’s a question for you, is there a (possible) dichotomy between owning physical gold as an investment and owning physical gold as financial insurance?  Could it ever matter?

Let’s take a look at that question for a moment.

I understand this may be a confusing question. Can you separate the two? If you own gold, you own gold and it serves multiple purposes as a part of your portfolio. You may be thinking that a better question would be is there a dichotomy in paper gold and physical, or fiat currencies and physical gold, etc…and you would be correct, but that’s too easy.

I am getting a lot of confused faces coming to Pacific Coin Exchange asking, do I buy or do I sell?

Here we are nearly seven years from gold’s peak of over $1900 an ounce and gold and for the longest time we have been struggling to breakout of the $1280 range.

As I type gold is $1221.

We have heard it all over these years, everything from gold is going to $35,000+ an ounce to gold is going back to $600, maybe lower.

We’ve heard how the dollar will crash in each of the last seven years and here we are seeing an upward trend in the dollar.

Let me go on record saying that the dollar will fail eventually and/or there will be a major change in currencies. I feel that is a fact. When and how? That’s the question.  Because there is no way of knowing, this very question is one of the many draws to owning physical gold and silver as a means of financial insurance.

We’ve heard about inflation and/or hyperinflation, that hasn’t happened (to the definition, yet, anyway). I think we are well on the way to massive inflation, I think that’s also a given (unless a new currency or standard is created – even then it could very well incorporate the trillions and trillions we have printed, then it’s inflation by another name). However, the government numbers say otherwise and that is what apparently matters above all else right now. That too will change.

This is where we can accurately state that perception is reality. From a psychological point of view we know that perceptions are mostly driven by emotions, that, in turn, leads us to believe that everything perceived is debatable.

We aren’t here to discuss philosophy or psychology, I’m simply leading up to couple of points. One being that what we perceive as true today could be deemed pointless/obsolete/BS tomorrow.

Today, the perception seems to be leaning in the direction that gold is on it’s way down, possibly hitting closer to $1100 before trending back up.  Why? Everything is great in the world, or at least that needs to be the perceived notion.

How do you make the masses feel comfortable? High dollar, high job numbers, lots of mindless chatter, to name only a few.

We know that in reality we are over $20 trillion in debt, running a massive deficit (and they just increased spending again!!), we have future obligations we have no way of supporting, other countries are growing sick of the dollar…I can go on and on and on.

We know it’s only a matter of time, I ask again, how much more time do we have?  And, once that time runs out where will gold prices be?

As of yesterday I read the World Gold Council’s March report for gold purchases (that they know of). Compared to the previous month, China doubled their gold intake in March (that is trackable), India was a close second and Russia was in the top buyers in March as well.

Do you think these countries are concerned about this dip (and/or any future dips if we are indeed in a brief downward trend)?  I think not.  I honestly believe that they foresee gold going up much sooner than we perceive.

Where do we think gold will go to? Here’s where you have to be realistic. We could do the math that some do which claims that should the US Dollar become backed by gold, based on today’s debt and obligations, blah blah blah, etc., etc., gold should be $35,000+ per ounce. I have never validated that math, I don’t need to, it’ll never happen, ever. There will never be a fully backed gold standard again, not like we knew of pre-1933, in my opinion.

Ask me if I think that there may be a new “currency” of which gold is a part of, yes, I can see that.  Should gold join a basket of currencies as the IMF’s SDR (follow all those acronyms?), then yes, gold would jump up substantially! Again, we have to ask jump up to where?

Gold has never seen $2,000. I think that would be the first stop. Unless, somehow, someone puts a limit on it, as the US Government did 1933 until 1974.  That is unlikely, based solely on whom would be making the call, I believe that would be China and their cohorts. They would want gold to be as high as possible. I think that is still capped, I’ll say at around $3500-$5000 an ounce should the best case scenario for gold ever occur. There are variables that can come in to play that can change everything, for instance, God forbid, there is another World War.  In fairness, who knows what can happen! This is exactly why you have financial insurance!

As for now, and for quite some time, we have been ranging from the low $1100’s to the mid $1300’s.  I am waiting for the days that we overshoot $1340-$1360 for at least 15-20 trading days before I get my hopes up that we are in a solid upward trend.  Should something happen that we do indeed see a prolonged rate of $1360+, we will have cracked all levels of resistance, the markets will get far more entertaining than they are now, and they’re pretty entertaining now!

If you are a chart reader you’ll see that as of today gold is considered neutral on the long term charts. Meaning, more sideways trading within a tighter range.  As of today the short term charts do in fact look negative. We are experiencing a pullback.

Could this be “slingshot” style pullback? Meaning this is a pullback in preparations for gold being shot up (the war drums are beating louder and louder). Or could this be a pullback in that gold will be setting a new bottom soon?

While we are talking technical, we know that gold has not been able to break that $1300 market in some time. The longer this takes, the stronger the lines of resistance at that level becomes.  Keep in mind that once those levels of resistance are broken, those levels become levels of support.

We have learned that you can not change the ways of Washington (by yourself), you can not change the ways of foreign countries (by yourself), you can not change the ways of the Federal Reserve or the fiscal policies they create (by yourself). You can not control or change the price of gold.

What you can change, by yourself, is your level of confidence in that no matter what happens to the dollar you are protected!

Buying physical gold and silver, while you still can, is the purest form of financial insurance and protection from whatever happens to ours and the global economy.

It may happen tomorrow, it may happen in five or ten years, there will be a time that you will not be able to find or buy physical gold and silver as we can today, much less at the prices we are seeing right now!  Take advantage of it while you can. Protect your financial future.

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