The signs are pointing to…

buy gold buy silverWe often hear that history repeats itself. A friend of mine, who is a Ph.D historian, once told me that history doesn’t repeat, but we can often experience an echo.

I am not sure who should get credit for saying this, you may have heard the adage that if we do not learn from history we are destined to repeat it.  And then there’s the whole deja vu thing.

The point is that we seem to be about to experience (or could be experiencing) one of these phenomenons in the metals markets.

If you have been following gold for any amount of time you probably know that in 2011 we saw gold hit a record high and silver nearly crossed the $50 per ounce mark.

In 2017 gold had its best year since 2010. I know that gold did not get the news coverage it may have deserved for having the year that gold had in 2017, thanks to Russian probes, stock market records, CryptoCurrencies, etc…Despite all that, gold had a 12.5% gain in 2017.

Earning a 12.5% return is great in any market. Granted it’s not in the 1000’s of percent jump as some crypto currencies saw, however, gold has been a solid form of financial insurance for all recorded time. Crypto currencies are backless digital numbers that have been around since circa 2009. Does that mean cryptos are not worthy? I am not saying that, I am saying that gold is still the long term champ.

We can’t leave out that 2017 was the US Dollar’s worst year since 2003 when compared to the basket of global reserve currencies. The dying dollars does help gold glimmer even brighter.

Here’s the “no-brainer” about it, the dollar goes down, so does your buying power, however, gold goes up, making your gold (and silver, silver tails along in most all instances) worth more. This is why owning physical gold and silver is the absolute best form of financial insurance (a hedge against all things negative in an economy).

My question (dare I say hopes?) is: being that 2017 saw gains bigger than 2010, will 2018 see levels comparable to what we saw in 2011?

If you go back to 2011 you’ll find that gold hit an all-time high over $1900 and silver fell about a dollar short of its all time high that we saw in the early 1980’s (thanks Hunt brothers) but still hit close to $50. We’ll beat both gold and silver’s records soon enough.

To keep it simple and not deal with breaking records, could we have an echo of the past this year regarding gold hitting 12+% gains?  It’s not only possible, it’s probable!

I think this may be the year the petrodollar falls, that will boost gold (and silver) tremendously.  Unlike cryptocurrencies, at least you can physically hold your gold and not worry about it getting hacked or losing a pass code. Sure, you could physically lose gold or have it stolen, I assure you the risks are far greater with cryptocurrencies no matter how you debate it.  I’ll leave it at this, always balance your risks…but that is another topic we can discuss later.

I do want to mention this (I know, I’m all over the place today, what’s new about that…). Thanks to the dive in bitcoin during December, gold jumped about $50 in a time of year that we typically don’t see those types of gains.

It is very encouraging to see that despite the crypto-craze that seemed to depress gold, and a historical year in the stock markers, we still saw the 12.5% gains and a jump at the end of the year! Both are very encouraging signs that many are over looking. Mainly because it’s being overshadowed by other markets, yet proves gold and silvers stability.

Gold will need some help to hit records (over $1900) in 2018, that’s approximately a $600 gain from where we currently sit. Could we see a $600 jump, yes, but it would take something drastic, as the petrodollar dying for one, or worse.  Silver already has some help with the forecast of solar panels and other industrial use (such as being used in electric cars) projected for 2018. Silver could see some big jumps aided only by industrial use alone.

Gold to silver is at 78:1, so there is a lot of room for silver to jump.  The stars are aligning to pull our precious metals to higher levels in the coming weeks, months and year.

As I have said already, it will take something pretty major happening to send gold faster toward record highs.  The last time we saw gold rocket off in price was 1979-1980, gold went from approximately $220 up to around $850 in a year.  We saw this jump in 1980 after a similar pull back in gold prices the previous years, as we have seen from 2011-2016.

We can’t forget that inflation was upwards of 18% around the early 1980’s too. We may not be seeing those levels of inflation today, technically inflation is relatively low. There are many other variables that more than make up for the difference in inflation rates the last time gold jumped nearly $600 in a year. For example, we are seeing assets grossly inflated, I’d venture out to say that we are seeing asset prices in a hyperinflation range with the crazy highs of the stock market. I think asset price hyperinflation could be worse than high levels of inflation in many ways, especially for those who have their pensions and 401Ks, etc., involved. It’s not hard to find convincing arguments for either side.

Not to be a doomsayer, but we all know that there isn’t a shortage of potential blowups around the world, many are mere centimeters away from igniting. Any/all of which could send metals soaring.

I know I have harped on this in many previous posts and I’ll mention it here again, if China backs the Yuan with gold or pegs gold to yuan backed oil trades, China will get to name the price of gold.  If China has as much gold as the world fears it does, that one play alone could take gold over $5000 an ounce. I have read from others who feel China could peg gold at $10,000 an ounce. I am not sure I see that, but I will not dismiss it, China could pull that trigger at any time.

As the man whose portrait is on the front of US $100 bill once said: “…but in this world nothing can be said to be certain, except death and taxes.”

I would like to add to that by saying nothing can be certain except death and taxes… and that gold and silver are the perfect forms of financial insurance against the uncertainties of all things financial.

Now that we are in these messy times, seemingly getting messier, do you have financial insurance?

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