Gold News

Have you Put Too Much Faith in the System?

Buying gold lets you chuckle at the knuckleheads in power...

GOD IS in his heaven. Gold is on its throne. All is right with the world, says Bill Bonner, founder of the Daily Reckoning.

But wait...all is wrong with the world. We get up in the morning. We go to our portable computer. We look at what is going on.

The stock market buckled Monday under the weight of a crisis in Europe and danger of recession at home. Reeling from a downgrade of American debt, the Dow Jones industrials plunged 634 points.

It was the worst day for the market since the financial crisis in the fall of 2008 and extended Wall Street's sudden, sharp decline. Stocks have lost 15 percent of their value in just two and a half weeks.

Too many things are going wrong...all at once. Leaders are getting desperate. Staying up late. Organizing conference calls. Watch out.

But we Dear Readers should be happy. We bought gold 11 years ago. And for the last decade our investment approach has been simple – Buy Gold on dips, sell stocks on rallies. The stock market has been rallying since March '09, so we've had plenty of chance to sell stocks. And gold hasn't missed a step. Up every year. No matter when we bought, it went up. Nothing has done better.

Stocks have been losers. Real estate has gone down. The economy sucks. Even Warren Buffett has lost money; he bought $3.6 billion worth of stock in the last quarter...his biggest bet since '08.

But gold is, well, amazing. JP Morgan strategists say it's going to $2,500 by the end of the year. That will be almost 10 times what we paid for it in 1999.

But get this...US 10-year Treasury debt has gone up too. Investors are taking money out of the stock market to flee what they consider riskier investments. As debt prices rise, yields fall. And now the US 10-year note yields all of 2.34%.

So, there's something to laugh about. And we can laugh at ourselves too. We thought it was absurd and appalling when lenders were willing to give their money to the US – the world's biggest debtor – for 10 years, in expectation of a yield of only 3%. After all, inflation is at least that much. Probably twice as much. Why would an investor willingly set himself up for losses?

But if the 10-year note was a bad deal at 3%, it is an even worse deal at 2.34%...and the people who bought it are richer for ignoring our advice.

Still, we'll stick with gold. Gold has gone up too. But for completely different reasons. You buy US Treasuries when you have faith in the system and the people running it. You Buy Gold when you don't.

T-notes have gone up because the lumpeninvestoriat seeks to protect itself from natural market forces. It looks for safety in the world's ersatz reserve currency – the Dollar. As Alan Greenspan said, the US won't default. It can always print more Dollars!

Gold has gone up because smart people know that there is only one money they can really trust. There is only one currency that won't disappear. And there is only one financial reserve that will hold up to a real crisis.

That is gold. Gold is back on its throne – as the world's One True Money. Wise governments, wise investors, and wise families are buying it to protect themselves from the jackasses who run the world's money system.

Recently, Ben Bernanke was asked about gold. Ron Paul asked him if he considered it money. 'No,' he said. Gold was just a commodity. Like bauxite or guano.

But now commodities are tumbling. If gold were just a commodity, it should be going down with copper and lead. Instead it is soaring.

Why is that, Ben?

Ha, ha, you see...the financial world is fun again. Yes, England is smoking from riots. Europe is on the edge of a complete financial meltdown. And America is sinking into depression. But we can still laugh at the morons who rule us. 

We can guffaw and snicker at the people who are supposed to know what they are doing. We can curl up in spasms of mirth at the knuckleheads who run the world's financial institutions...

Buying Gold?...

New York Times best-selling finance author Bill Bonner founded The Agora, a worldwide community for private researchers and publishers, in 1979. Financial analysts within the group exposed and predicted some of the world's biggest shifts since, starting with the fall of the Soviet Union back in the late 1980s, to the collapse of the Dot Com (2000) and then mortgage finance (2008) bubbles, and the election of President Trump (2016). Sharing his personal thoughts and opinions each day from 1999 in the globally successful Daily Reckoning and then his Diary of a Rogue Economist, Bonner now makes his views and ideas available alongside analysis from a small hand-picked team of specialists through Bonner Private Research.

See full archive of Bill Bonner articles

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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