Gold - The Battle Is Already Won
July 29, 2010
This morning's email from gold general Jim Sinclair - under siege yet again from the troops in the "community" - prompts this morning's post.
Mr. Sinclair often writes with a war mentality pitting the gold community against the evil bullion banks - and a good chunk of the rest of the financial world. Don't get me wrong, I think there is plenty of evil out there (it seems that on Mondays following a meeting or conspiracy of the assembled dignitaries in the G20 my investment accounts take the hit) but apparently a good chunk of the "community" gets its panties all in a bunch every time gold takes the hard hit.
That is because nearly 10 years into the secular bull market in the rebellion against dishonest monetary systems a casino mentality - so well formed through the previous 20 year secular bull market in paper assets (stock certificates, bonds, derivatives, etc.) - remains intact. This includes a great number of self-described gold bugs in my opinion. In other words, the "community" does not tend to believe its own bullshit on balance. If they did, they would see opportunity or at least sit tight during these phases that have been all too common all the way up since 2001.
There is an opportunity to own value shaping up and I suspect the usual casino players will fail to capitalize while the minority capitalize once again. Missed the last buying opportunity this space identified in euros? Well, another opportunity is on the way. Who will capitalize and who will be immobilized by fear? Gold in USD is also presenting an opportunity. In fact, name me a major developed society that is not tramping out its currency for the purpose of manufacturing politically expedient economic growth and I will show you a society of relative value from an investment standpoint. There are those in ascension and it is no coincidence that those are targets for my investment dollars in the big picture.
For now, gold is a monetary value anchor and in a world of eroding confidence in politicians and policy makers who use official paper and digital money, gold represents value; nothing more, nothing less. Still, it is always great to exchange confidence paper for value when value goes on sale. You do not buy gold when everybody loves it. You understand who you are and if you perceive that your personal situation is in need of this value anchor you buy gold when the public hates it, when the speculators (ultimate casino patrons) are dumping and you-know-who is buying or buying to cover.
The battle was won in 2008 when an uber-opportunity presented, most failed to capitalize (thank you deflation proponents) and then snapped back faster and better than most other assets and asset classes. Is a drop to 950 (on radar for many months in NFTRH) out of the question? No, nor is the long term battle line at around 870 for that matter. Do you think anyone who has understood what is and is not monetary value since 2001 is pained by these numbers? They are just numbers and they are 150-200% above cost basis in many cases. And by no means are these downside targets shoe-ins in my opinion.
So whatever you do, sit tight and realize that what is happening now is all part of the game and for some it is a time of opportunity as value goes on sale. It is really no more complicated than that.
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