But, we’re interested in making money. And right now could be the best time to get into the market for a chance to both protect your existing wealth and to make money.
We’re not talking about stock markets here. Whilst there are good “value” opportunities to be had in defensive stocks, there’s another far better place to deploy some capital.
The market that really deserves your attention is gold.
The perfect storm that will drive the gold price higher
Because there is the financial equivalent of a perfect storm converging on the markets: fear of further financial catastrophe; the further printing of money by governments desperate to avoid deflation; and the looming threat of inflation coming back with a vengeance as a result of this government stimulus.
And when it hits, there’s going to be a rush of global capital into gold. The time to get in is now… ahead of this surge. Gold may well turn into the next asset bubble. If we’re going to make money from it, we want to be in it before the crowd starts pumping that bubble up.
So far, gold is perceived as what it’s best at being: the ultimate store of value. For that reason alone, it’s already starting to attract a small, but growing crowd, as Bill Bonner, points out:
“Still, the crowds are pretty thin, compared to what they will be when the bull market in gold really takes over. Then, your neighbours will be talking about gold... and telling you how much money they made in gold. That’s still ahead... when gold goes over $1,000... over $1,500... over $2,000.”
This isn’t small-time investors driving gold, though. Not yet. What we’re seeing is an influx of money from bigger institutional investors, eager to hedge portfolios with a more stable asset class. This is a fairly new development. Until recently, the bigger money had been staying out of gold.
“It’s not just the hyperactive, hot money hedge funds batting around gold anymore,” says Andrew Mickey of Prosperity Dispatch. “Now pension funds, mutual funds, and other institutional investors are betting on gold – in a big way.
“That is the big difference this time around. The big money interest hasn’t been there for decades, and it looks like that’s quickly starting to change.”
And sooner or later, when it hits the mainstream press, then there’ll be another flood of “hot money” that will continue to drive the price higher.
The big move is already under way
The move has already started, by the way. Gold is up 13% in the past month. Since it bottomed near $700 in November, gold has rallied by 33%. And it looks like it’s just getting started.
Speculators in the gold options market – amongst the smartest of market participants – are betting on gold topping $1,000 by April. They clearly see $940 as cheap. Meanwhile, Peter
Munk, Chairman of the world’s largest gold producer, Barrick Gold, said: “Do I personally believe gold will break through $1,000? It’s not a question of if, it’s a question of how soon.”
Munk sees what he calls an “unpleasant and frightening” trend of investors buying gold as protection against uncertainty in world markets. People no longer believe in the security of the US dollar and other paper currencies. Gold is seen as the only “currency” that can hold its value no matter what happens.
From a technical analysts’ view, gold is also looking good. Citigroup chartists wrote this week, “we see gold breaking further through key levels and the market appears on course to making new highs… we therefore remain unequivocally bullish on the short-, medium- and long-term outlook for gold… this useless metal that yields nothing can eventually test $2,000”.
It doesn’t really matter whether you believe we’re faced with deflation or inflation. Gold can protect you whichever happens. If we get inflation, gold will attract money. Whilst the value of everything else is eroded by inflation, gold holds its value.
If we get deflation, then governments will debase their paper currencies – as they are doing already. But sooner or later, this will reignite inflation…
Gold is a great way of protecting a portion of your wealth right now. And if money continues to flow into gold, then you could also make a very decent profit in the months ahead.
Source Frank Hemsley For The Right Side
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