I am utterly stupefied when I read daily reports from educated investment groups who seem to be mesmerized by actions of the Fed and the somehow overwhelming effect their decisions have on precious metals and gold in particular. Discussions are intense regarding Friday’s annual Fed symposium to be held at Jackson Hole in Wyoming. But the reality is that the time for Fed action has come and gone. It’s like the captain of the Titanic ordering the beach chairs on the Lido deck to be adjusted for passenger comfort, moments before crashing into the iceberg. (Yes, I know the Titanic didn’t have a Lido deck and the collision occurred at night, just go with it).
If the Fed does nothing, we continue to stagger along with no growth or substantial market activity. If the Fed raises interest rates, it will kill any thought of growth and the market will roll up like a pill bug. So, somebody please tell me the logic in believing that the Fed can produce any activity that has a substantial negative effect on the price of gold. In both cases, intelligent investors will seek the safety and profitability of precious metals, while every other financial instrument is collapsing. Sooner or later, the economy and market is going to hell, it’s just a question of timing. And the Fed factor has little if anything to do with it. They’re the little Dutch boy with their finger in the dike, but the damage is done and there is nothing to prevent the dam from coming down.
Factors that have an immediate and potentially far more cataclysmic affect on American investors include, but are not limited to: the potential bankruptcy of Deutsche Bank, corporate misuse of cheap money made available by QE programs, the growing number of countries resorting to negative interest rates, Brexit, the growing list of countries with weak and failing economies, Saudi Arabia’s ongoing depression of oil prices, and the potential replacement of the dollar as a world reserve currency. Any of these factors have the potential to decimate stock values and/or dollar value, literally overnight.
Simply put, the time to view gold and other precious metals as anything but the premier world reserve currency has passed. Its potential to increase in value quicker than a stock or other financial instrument no longer needs to be a concern or consideration. The time has come to protect your assets with the only logical, time-tested and proven store of value available throughout history. It’s a finite product and prices are low. Don’t get caught without a chair when the music stops.