An Unbelievable Opportunity in Gold

Yes, there is no typo in the headline of this article. Today
there is still an unbelievable opportunity to invest in gold that will
disappear over the next several years as this monetary crisis deepens. Despite
the general widespread sentiment of Western financial advisers that they have
missed the run-up in gold and now it is too late to buy, this is not true at
all. In fact, to illustrate how little people understand about the reasons to
buy gold, of all my friends that I urged to buy physical gold more than six
years ago when gold was less than half of its current price, I only know of one
that has bought any gold, and it still took five years of my prodding, four
times a year, for this single person to purchase gold. This is how incredibly
misunderstood an asset gold remains today despite its enormous run higher in
the past 8 years. This brief anecdote aptly illustrates the bias against gold
and the foolish belief that gold is a bubble that persists today due to the massive
propaganda and disinformation campaigns waged by bankers against gold. It is
ironic today that public mistrust of bankers can be at such a high level at the
same time that the public is still enormously willing to follow all of the bankers’
propaganda about gold. This great twist of irony illustrates just how powerful
the bankers’ century long misinformation campaign about money and gold has
been. Few people even understand how money is created let alone why gold is a
protector of people’s rights.

Even if gold continues to correct this week, and the bullion
banks, the US Treasury, the US Federal Reserve and the Bank of England are able
to engineer a further decline in gold prices in the futures markets, this event
will not be the bursting of the gold bubble as it will be, and always has been,
described by many Western media sources. Even if gold loses another $120+ an
ounce from its current price, this event would not mark the bursting of the
gold bubble. The incorrect description of corrections in the gold markets, or
downright meddling of Central Banks into the suppression of gold prices, as the
bursting of a bubble is just as erroneous as the recent descriptions of rising
stock markets as signs of economic recoveries. And this is the legacy bankers
have created - confusing the masses to believe the exact opposite of what is
true.

Though I’m not going to tell you the price point at which I
believe gold will start rising again, it is not impossible to time markets as
investment charlatans will lead you to believe as well. In fact, at the very
beginning of this month, we told all subscribers of my Crisis Investment
Opportunities investment newsletter to sell out of their precious metal stocks
right before this steep correction in gold and silver occurred to lock in their
profits and we’ll tell them to re-enter when we
feel that a low-risk, high-reward time to reposition our assets has
materialized once again. By understanding the rigging game in gold and silver
markets and in stock markets, we’ve more than tripled the returns of the
S&P 500 this year. In all honesty, however, bankers have filled most
investors’ heads over the years with so many lies about gold that for the
majority of investors, it would be a futile effort to try to time the market
anyway. Most would be better off just understanding the fundamentals behind why
they need to own gold and to buy and hold on through the dips and rises until
it reaches the mania stage.

Being able to predict the recent steep correction in gold
and silver in advance of its occurrence merely requires understanding the
manipulation and rigging game in these markets. Understand the rigging game
behind gold and it is quite possible to repeatedly time the gold markets with a
fair amount of accuracy. Subscribers to my services will vouch that I have
called near perfect tops and bottoms in the gold and silver markets more than
several times over the past several years. Even if you refuse to acknowledge the
indisputable signs that the gold market is, and has been rigged for decades,
you only need realize one thing – that despite the best efforts of the US
Federal Reserve, the US Treasury and the Bank of England to suppress the price
of gold, gold’s long term trend since 2001 when it bottomed at about $250 an ounce,
has been up. And if you are astute enough to realize that the gold markets have
been, and still are rigged, then observing gold’s rise from $250 an ounce eight
years ago to more than $1200 an ounce just a week ago should give you the
utmost confidence, that despite the best efforts of bankers to wreck gold’s price,
its long-term trend will remain higher for quite some years to come.

Still, no matter what side of the “gold is rigged” debate
you stand on (and there is lots of evidence to believe the "gold is
rigged" side of the debate thanks to the tireless work of GATA.org), the
public’s stated reasons for not owning gold are not only absent of logic but
they are downright foolish. Two of the most frequently given reasons I’ve heard
from Westerners as to why they will not buy gold are parroted banking
propaganda that make absolute no sense. The first reason people often give as
to why they are reluctant to buy gold is that gold pays no interest. People
would realize how foolish this stated reason was if they only realized that all
paper money is issued as debt. If there were no debts in the system, there
could be no money, yet people gladly accept an instrument that is issued as a
debt and believe that it is a pure asset. Secondly, they state, you can’t buy
anything with gold. You can’t pay for many items with Euros in many American
stores or buy items with US dollars in many European stores either, but that
doesn’t mean the Euro is worthless to own if you live in America or that the
dollar is worthless to own if you live in Europe. Both will still have some
value in buying goods and services. 
Thus, to not own gold because “you can’t buy anything in stores with a
gold coin or gold bar” is an answer devoid of any logic whatsoever.

Throughout history, gold has always been accepted as a form
of money. In fact a gold coin in ancient Roman times would buy you about the
same things today as it would have back then. With US dollars, you now need
twice as many dollars to buy the same things today as you would have needed
just 8 or 9 years ago. If a wealthy eccentric man walked into a Maybach auto dealership
and insisted on paying for four custom made Maybachs with $2.4 million worth of
gold bars, I guarantee you that the dealer would find a way to accept the gold
bars and make the $2.4 million sale, knowing that he could choose to hold on to
the gold or to convert it into Euros, Yen, Pounds or Dollars at a later point
and time. Thus, there is no reason to believe that gold can not be used to
purchase items. Gold may be an inconvenient form of money, but it will be much
more inconvenient to watch your fiat money crash and burn and for much of your
wealth to be wiped out when the second phase of this monetary crisis commences
sometime in 2010 or 2011.

Secondly, psychology plays a huge role in the foolish bias
of Westerners against gold. Were Westerners to live in China for just one year,
where almost everyone knows multiple people that own physical gold, I guarantee
you that their perception of gold, upon returning to America, would be
drastically changed. They would be inclined to buy more gold just because of
the sheep herd mentality that would make them much more comfortable purchasing
physical gold after watching many of their friends and associates engaging in
the behavior of buying gold for an entire year. Though in China, this herd
behavior happens to be correct, just because everyone is doing the same thing,
does not by default, make it the correct behavior. In fact, in investing, just
the opposite is normally true. When everyone is doing (or not doing) the same
thing, they almost always are wrong. Think of US hedge fund manager John
Paulson and his enormous coup of earning $4 billion of profit for himself in
2007. Paulson stood on the opposite side of the subprime mortgage bet from the
rest of all of Wall Street. Regarding a recent book based entirely upon Paulson’s
enormously successful bet to short the US housing market, one reader stated:
“The most amazing thing is that no one seemed to believe [Paulson] until the
market crashed and by then it was too late.” Though Paulson was a lone wolf
among very few lone wolves that existed at the time regarding his beliefs that
the subprime mortgage market would crash and burn, he ended up being right and all
of Wall Street ended up being wrong. With buying physical gold, it will also
pay to think like a lone wolf if you are a Westerner.

However, here’s the lesson most investors still refuse to
learn about Paulson’s enormously successful investment play. The majority of
investors never take the next crucial step of investigating the reasons why no
one believed Paulson’s comments about the US housing market. If the did, they
would discover that the reason nobody believed in Paulson’s enormous bet back
then was due to the propaganda of bankers like Ben Bernanke and politicians
that assured the American people that the housing market would be fine.  Many times the masses immediately accept
a person’s statement as truth with no critical analysis of that statement just
because that person is a public authority figure. But how naïve would you have
to be to believe President Obama’s recent statement on the American TV show 60
Minutes that "[he] did not run for office to be helping out a bunch of fat
cat bankers on Wall Street.”  Goldman
Sachs’s Political Action Committee was the second largest contributor to
President Obama’s election campaign, so were it not for the money of “fat cat
bankers”, Obama may very well not even have been elected as President in
2008.  Knowing this, do you really
believe that Obama has zero obligations to the second largest contributor to
his political campaign?

Furthermore, were you to merely analyze President Obama’s
financial decisions since he has taken office, the disingenuous nature of his
above comment would be readily exposed. Almost every single financial policy
decision of his administration has benefited “fat cat bankers” to the detriment
of everyday US citizens. Again, those blinded by political or racial loyalties
at the expense of logic will be sure to foolishly digest my statement as a
politically-biased statement though there is no evidence to support that
conclusion. Any reader can easily check my past history of public statements and
discover that my criticisms against the foolish fiscal and monetary policies of the
Clinton and Bush Administrations are just as numerous as my criticisms levied against
the Obama Administration.  If you
are serious about never wanting to be fooled or bamboozled by a politician
again, then never look to a politician’s words, but only to his or her actions,
to unearth a politician’s true character and nature. Only a fool would ever
accept a politician’s words as an accurate representation of a politician’s
intent.

Likewise, you would be very wise to apply the above maxim to
bankers as well. Investors should look towards bankers’ actions and not their
words when trying to decipher their intent. Bankers are responsible for the
propaganda that gold is a barbarous relic. Bankers are responsible for the
propaganda that gold is a cumbersome asset to own because it pays no interest.
These are their words. Yet if you look toward their actions, Central Bankers
all over the world were net buyers of gold this past year. Shouldn’t that alert
you to the fact that bankers are a bunch of conniving liars in everything they
tell the masses about gold? When Paulson first assumed his position shorting
the subprime mortgage market, it was not only bankers, but also chief
executives at large commercial investment firms that derided him, stating that
the subprime mortgage market would be fine. I personally heard many of the same
criticisms when I started telling people to buy physical gold six or seven
years ago – that I was crazy for thinking that the US dollar would get into trouble
and that the US dollar would be fine, that owning gold was a stupid and foolish
investment. People actually laughed at me for buying gold. A top investment
strategist at Citigroup stated that gold was a bubble in 2005 when gold reached
$500 an ounce. And now, even though the gold critics have been wrong now for
eight years in a row now, they still use every gold correction as an
opportunity to deceive Americans into believing that gold is a bubble and about
to collapse. And amazingly, Americans continue to look not towards bankers’
actions but to their words only. The overwhelming majority of Americans believe
the bankers’ WORDS that the US dollar will be fine, and foolishly point out
every bear rally in the US dollar as proof that the dollar will be fine.

Ninety-five percent of what I’ve heard financial advisers
state about gold is wrong. Ninety-five percent of what I’ve read in the public
domain about gold is wrong. Ninety-five percent of what I’ve read from the
Western media about the US dollar is wrong. And ninety-five percent of the
arguments I’ve read against owning gold, even when filled with supposed “facts”, are wrong. Many of
the arguments against gold sound convincing, even though they are deeply flawed
because erroneous data are used to produce flawed conclusions. But this is the very
definition of propaganda -  arguments that use erroneous data presented as “facts” to
draw convincing conclusions that are highly flawed, though to the undiscerning
eye, they seem quite logical. The reason that bankers have always spread so
much propaganda about gold is because gold is the kryptonite of bankers. Gold
allows people to preserve their wealth against their fiat currency debasement
schemes. 

Hank Paulson, in testimony before Congress, stated that it
was necessary to bail out Goldman Sachs through the bailout of AIG because the
people, “were unhappy with the big discrepancies in wealth, but they at least
believed in the system and in some form of market-driven capitalism. But if we
had a complete meltdown, it could lead to people questioning the basis of the
system.” If Americans really wanted to expose the fraud of the entire financial
system, all they would have to do is to put just a tiny part of their entire
savings into physical gold. If all Americans put perhaps as little as 5% of
their entire savings into physical gold, this would likely be more than
adequate to expose the fraudulent basis of the financial system by which firms
such as Goldman Sachs reap such ungodly profits year after year. What frightens
the bankers the most is the possibility that people will fully understand the
basis of the system, and this is why Western Central Bankers continually wage
so many disinformation campaigns against gold.

Consider this story about HSBC and its retail gold clients
that was reported last month: “The British bank, which has sizeable vaults
underneath its US headquarters overlooking Manhattan's Bryant Park, has told
retail customers – many of whom are middle-men and custodian services which
store gold with HSBC on behalf of hundreds of their own clients – that all
their gold must be out of its facility by July 2010. The decision has seen
fleets of armoured cars laden with gold ferrying the precious metal out of New
York. An HSBC spokesman declined to comment, but it is understood that the
increased demand for physical storage of gold by corporate clients is behind
the move to end the retail service, which HSBC inherited when it took over
Republic Bank a decade ago.” With banks, it’s never about doing what’s best for
their clients. It’s always about what’s doing what’s most profitable for their
executives. For HSBC’s individual retail clients that were intelligent enough
to own gold, HSBC most likely realized that larger, much more profitable
relationships could be built with corporate clients that wanted to buy gold versus
their retail clients. Thus, their retail clients got the axe despite the fact
that HSBC knew that such a decision would be incredibly inconvenient for them.

Just as was the case with subprime mortgages when almost all
of Wall Street got it wrong, the only reason anyone believes that gold is a
bubble today is because people have forgotten how to think for themselves, foolishly
believe that there are not hidden ulterior motives behind the beliefs spouted
by Wall Street, and for some inexplicable reason, still internalize and accept
all banker propaganda against gold while at they same time, they claim to
distrust them. That’s why no matter how much further gold drops before this
correction ends, if you don’t make the move to buy physical gold if you don’t
own any, you will look back with regret five years from now and realize that
you missed an unbelievable opportunity.

Comments

[Selah]

I've been noticing the Xmas lights too.

I count about a dozen houses in the general area with lights up. There used to be fierce competition along the streets here to produce the most outlandish displays and we would drive around and take pictures. Now it just looks lame...

[Howard_Beale]

Yeah, it puts a tear in your eye when the Griswolds don't go nuts. Watch Christmas Vacation and you'll feel better.

[Ripped Chunk]

Eddy has the right idea. Buy an old Winnebago for cash or better yet, swap for one. Travel the country visiting friends and relatives.

[Grand Supercycle]

Gold had a parabolic run and currently has some bearish patterns from an extremely overbought state.

The USD rally I forecast some months ago has started.

http://www.zerohedge.com/forum/market-outlook-0

[Hatshepsut7]

There is also going to be a huge opportunity in the Zimbabwe dollar.

It is set to move from worthless to kinda worthless before falling to totally worthless.

[Missing_Link]

Incorrect.  The technicals indicate that the dip that began on 12/03 has now played out fully and gold is in consolidation before the next leg of the run-up.

[gmrpeabody]

Really, GS, you are overplaying this dollar bounce. IMHO, this will be nothing much more than a typical knee jerk reaction of the flight to safety bunch trying to avoid the carnage threat in the European community. It does not change the fact that all these currencies are racing for the bottom, while gold will be racing to offset those effects. Gold has been 'overbought' many times over the last decade or so, and yet there always seems to be room for more. Mr. Kim is correct in his assertations that bankers and wall street are blowing sunshine up everybody's asses.  

[perchprism]

Seriously, Grand Supercycle, doood, get over yourself already.  I'll puke if I read one more time how great you think you are for predicting a correction in the dollar.  The truth is, you're starting to suck out loud.

Smartknowledgeu---this is a crappy article.  Wait until you aren't rushed to get to work in the morning before snapping off a POS like this.  Total waste of time.

[Anonymous]

No one cares about your "Market Outlook." Stop advertising on every fucking article. It's annoying as hell.

[Missing_Link]

Agreed.  He's almost as annoying as Cetin Hakimoglu.

[Anonymous]

Talking about metals in NY vaults, how about some insight as to what happened to the silver underneath the WTC? Was it recovered and, if so, is it ever-so-slightly radioactive?
Just wondering, don't know anything.

[GoldSilverDoc]

Amen, and amen.  

[Daedal]

smartknowledgeu,

I agree with your underlying premise, but I must admit that I'm a bit disappointed in the article.

You glossed over the important bits, for instance, the 'fact' that Gold price has been suppressed, but you do not tell the reader how it has been suppressed. You also don't tell us why gold bottomed in 2001? Considering your piece is designed <I think?> to explain why Gold is an opportunity to those that are not aware of the fact, you ignore a lot of detail that ought to be included.

Also, you make a lot of points and assertions but offer little backing. You speak of your record of calling tops and bottoms, but we don't know who you are. Not to mention, some paragraphs are entirely off topic.

You're clearly an intelligent person, but I hope that in the future you would gather your thoughts and provide greater detail in a more logical fashion. I felt this piece was more of a free-form rant than an explanation of Gold as an investment.

[Anonymous]

Smartknowledgeu is the investment service run by J.S. Kim, who blogs at theundergroundinvestor.com. Overall, he has interesting ideas supported by solid analysis, and I usually keep a regular eye on what he posts. But at the same time, his blog is definitely aimed at marketing his investment services, so you get a lot of this type of seld-promotion and withheld specifics. You can find some of his better (and less promotional) analysis at his other site here:

http://www.endfinancialfraud.org/articles.php