23rd March 2002
The late '70 was one of the wildest years in gold trading of the 20th Century, noticed 1979 spot gold prices spiked to over $850 during 1979/1980. Since then, Dow Jones has progressed for the last 20 years to hit its peak in Y2K with the aid of 500 billion of $ sucked from the biggest financial opera in history while Gold was headed to negative direction from DOW index for the same equivalent of time. So, now after two decades in a game of velocity, which would be a safer investment ?
| The Perfect Storm |
The basic logic: In the next 5 years, personal investment strategy is not entirely confined how to make money but rather preserving value becomes a priority too. The lesson of the tragic Sept. 11 may inspired some to think other than the thousands of innocents who died, how many physical paper currencies had vaporized with the collapsed structures - the GOLD remains and has been recovered. So, it suggests the paper notes that we have taken 20 years to build a confidence to think they are gold substitute can easily be printed and gone; while the precious metal which has taken more than 5,000 years to established its status does has its resistance to crisis physically and in its preservation of value.
Another element is, chances for DJIA to go another 50% up to 15,000 points is not impossible but even then if it materializes, you will know such possibilities will not be supported by economic fundamentals anymore. All I am trying to tell you is, chances for GOLD to go from USD280 to USD420 is always brighter than the equivalent DJIA indexes. While on the other hand measures on downside risk, chances for DJIA to lose 30% is HIGHER than expecting gold to retrace at the same ratio. Supported by a rule of supplies versus demand with the cost of production around USD250-00 ~ 280-00 per ounce. The more scary part is: with the piling of world's debt combined which may comes to trillions of dollars and with the attitude of each term of the US President think such headache should be the next term's man responsibility; I doubt when will this bubble be burst. What if some calculative races who controls the financial think to write off such debts so easily was a bad idea will probably leads to a real massive disaster for all of us. WHY ? Because looks like in order to get back how people owe you, you have to convert such huge debts into debentures or other form of financial instruments that can be easily converted back to recognized moneys again.
I am like Forest Gump and and I cannot think of any solution - other than adopting a universal standard in currency usage. You know how difficult just to get both the Palestinian and the Israeli to sit calmly face to face on a meeting table and imagine how to include factional hostile members to join in, huh ? On implementation, the ONLY problem is to get everyone to agree to such standard; in order for that to happen, theoretically, the entire financial system has to collapse first. How to make it happens without seen as a scheme job ? Wow, WHY don't we blame it on the terrorists ? if you don't like some particular human specie or belief, why don't summarize them as well as common enemies and/or trouble creators ! Well during the interim period of adopting a new currency, you have to identify some universally accepted temporally substitute to get through the chaotic period...
What else ? It can't be US treasury Bonds again, right ? Will that happen ? I am not sure - Guess and HOPE not. But the underlying scary fact no one wants to admit is - this could happen ! It may not be in my generation but I doubt it can pull through another. Although I would not suggest making more moneys this way but you know very well, USD3,000-00 per ounce is not entirely a fantasy too huh ? Well, if there is a third world war - I don't think it will last a very long time. But if the world still goes on this way - the next possible World War IV will be started and fueled by polarization of TWO major religious groups of Chritian and Muslim, WOW ! that will be real scary then because it might involve billions of believers of both schools. Anyway, it is just a wild thought while cruising through y2k. I do know this could end up with creating some potential patriotic virtual enemies on the Web. So, just wait for the gold to hit USD410--00 first, okay ?
| c l o s e |