Many short term gold bugs have been disappointed with the trading channel that gold has found itself trading in for the past four months, particularly based on the year’s strong start. But the trend is as dependable and cyclical as the seasons. The only force capable of modifying the annual cycle is economic pressure. The slowing economy, impotent administration, and over-heated bull stock market are successfully combining to create an early end to the summer doldrums. Nervous investors are beginning to realize that the party is over and it’s time to secure and protect gains, by getting or weaning out of the soon-to-be volatile stock market and back into the safety and security of gold.
Many investment gurus are suggesting that investors wait until gold shows strength by climbing above $1,259. If you live in Southern California like me, I’m here to tell you that you’d be equally served by waiting for a small tremor before buying earthquake insurance. The Big One is coming and if you’re still waiting for a sign, then you’ve missed it, because it was several miles back and labeled, “You’re Now Entering the Twilight Zone.” The Fed hasn’t hit its 2% monthly inflation rate since March and threw the towel in earlier this week with regard to a September interest rate increase. Regardless, like I’ve said before, no matter what the Fed attempts at this point, it’s simply too little, too late. The Big One is coming and with a vengeance.
You haven’t heard anything about it at this point, due to the media noise created by investigations, resignations, and potentially pending firings. But the national debt is rapidly approaching the debt ceiling and will arrive long before the originally proposed October date, quite possibly as early as next month. Considering the utter legislative ineffectiveness of the administration to this point, it doesn’t take a leap of faith to believe that another “shutdown” is probable. That might very well provide the stock market with the straw that breaks the bull’s back. Bitcoin’s dramatic nanosecond selloff earlier this month was just a small tremor preceding the stock market’s Big One to come.
Trying to “time” the market at this point can be more than a little hazardous to your financial health, just like playing Russian Roulette with a fully loaded pistol. The market can still go up and gold can still go down, but when the Big One hits the only less-scathed survivors will be those who protected their portfolios with gold and other precious metals, silver in particular, but that’s another lesson. Precious metals will be a financial life raft for many in the coming storm. Today’s lower prices are just an added bonus, but availability is the most important factor, practically at any cost. Put down the gun and pick up the phone, there’s no better time to increase your precious metals ownership than now!