An exhortation to Buy Gold and silver as the trade of the decade gets stronger...
HAVE YOU GOT your silver and gold yet? asks Byron King for Whiskey & Gunpowder.
If you have time to read only one single paragraph of this web-page, here's the takeaway:
I urge you to hold at least 10% of your portfolio in gold and silver.
Why? If you follow almost any of the publications from Agora Financial, you ought to know that in one way or another, for about 10 years, Agora has been advising people (this means you) to buy precious metals. Back then, in the good old days of Y2K, gold was selling for well under $300 per ounce. Silver was going at $2 to $3 per ounce. Lately, gold has been selling in the $900 range, with an excursion over $1,000 last month. Silver is trading in the $12-14 range.
Does that mean you've missed? Starting in 1999, the founder of Agora Financial, Bill Bonner, told you to Buy Gold. Bill even helpfully labeled it "The Trade of the Decade". Over the years, Agora Financial published countless essays about gold from the Mogambo Guru, who was never subtle about it
"Buy freaking gold," said the Mogambo. "And while you Buy Gold, buy silver too."
Many other Agora editors and contributors told you to Buy Gold and silver. We told you so. So where's your gold and silver – and what prompts this precious metals blast?
Well, how about this e-mail from a reader named Robert in New York:
"Why are you talking so much about gold? It's like for the last year you were discussing commodity stocks, and now you're a gold bug. You're joining everybody else who is talking about gold, and it's overbought – both the metal and the story. There are headlines in the newspapers from USA Today to The National Enquirer talking about 'investors' (ha, ha) rushing to Buy Gold. I can't watch TV without seeing commercials for companies that want you to sell them your gold jewelry.
"Don't you get it? Gold is the latest fad. Really, what's your plan? Are you going to hoard gold and then wait for the dollar to crash and go to McDonald's and buy a hamburger with a gold coin...?"
Thanks, Robert. So you read The National Enquirer, huh?
Robert, Robert, Robert...Some folks are destined to own gold, I suppose, and some aren't. I'm not recommending gold so that you can go to a restaurant, buy a hamburger and pay for it with gold. I'm recommending gold because it's one way – and an ancient and established way – to preserve your wealth and purchasing power over time, especially during uncertain times. Gold has history. Gold is real. Gold is solid. Gold is nobody else's liability. Gold is quiet. Gold can be your own little secret. Archaeologists tell us that for about 8,000 years of human history, if you had gold, you could buy stuff. And if I owned a restaurant and you wanted to pay for your hamburger with a $50 US Gold Eagle, I assure you that I'd take the coin and find a way to make change.
And what of the almighty US Dollar? Doesn't the world love the Dollar? Don't people from Uruguay to Dubai to Shanghai dream of stuffing their mattresses with US currency? Isn't the Dollar the world's No.1 reserve? Don't the Chinese and Japanese and Arabs own nearly $2 trillion of US Treasury paper? So isn't all this talk-talk about the falling Dollar just a bunch of smack? How could the Dollar crash anytime soon?
No, not impossible. Across the arc of history, all societies collapse, sooner or later. Especially complex societies like ours. Anthropologist and historian Joseph Tainter wrote a fine book about it, The Collapse of Complex Societies. Collapse tends to occur quickly, as complex systems simply break down and the social construct declines to a much simpler form.
More common than societies collapsing, however, is a currency collapse. It's infrequent, but it happens. According to US government statistics, the US Dollar has already lost about 98% of its purchasing power since 1913, the year the Federal Reserve was established. Okay, so 98% is not 100%. But it's close. Just a mere 2% to go, right? And the Fe's working on it – and working hard.
Just because the US Dollar has never completely failed, does it mean that a total collapse could never occur? Does it mean that you shouldn't at least hedge against that increasing possibility? Denying the possibility of a bad event won't prevent it. And denial can produce tragic consequences. Some of the people in the World Trade Center on Sept. 11 waited at their desks, turned off their computers and made phone calls before they started evacuating. Fatal habits? Or denial that the roof was about to cave in on them?
Denial only interferes with your ability to respond to a disaster. But with a currency failure, by the time it happens, it's too late to evacuate. You're trapped inside a burning skyscraper.
The financial commentator, Gary North, believes, "The West's economy really is at the edge of a leveraged disaster. The politicians know only one answer: deficit spending. The central bankers have only one significant tool: monetary inflation. The speed of events is increasing. The markets don't reflect this yet. This gives time to a few people to get out. But the vast majority cannot get out. There are too few escape hatches open."
Is that apocalyptic enough for you? Or is good ol' Gary North just going over the top? He might be. But even if Bernanke and Geithner succeed in steering the economy away from complete disaster, the cost will certainly be some degree of currency debasement. In other words, even "success" would be bullish for silver and gold.
The point is that the Dollar's value is looking a little shaky. So you ought to safeguard at least 10% of your portfolio Buying Gold.
You get the picture. Now go get some gold and silver.