The Importance Of Gold In 2018 And Beyond

The Importance Of Gold In 2018 And Beyond

Sprott Money News

 

If you've held physical gold for the past five years, you've likely been frustrated by its lack of price appreciation. Of course, physical gold always retains its value as sound money and wealth "insurance," but while prices of paper assets have flourished since 2013, the dollar price of gold has languished. That, it seems, is about to change.

At long last, gold, silver and all commodities appear poised for a price breakout in 2018 (and beyond) as the lower dollar, price inflation and higher interest rates that so many expected in 2010-2011 finally come to pass. In addition to those factors, several gold-specific positives have recently appeared, and they demand your consideration:

  • Global gold demand is strong, with the only restraining component being western investment demand. Since western investors are typically trend followers, you'd expect low investment demand to appear at price lows. This is exactly what the recent Gold Demand Trends report from the World Gold Council showed when it was published earlier this month: https://www.gold.org/research/gold-demand-trends/g...
  • Traditional technical and cycle analysis also augurs for a price bottom and trend change. Respected market analyst Tom McClellan recently declared the current cycle to be upward for gold, with the next three years providing some unusually strong price gains. You can read more of his analysis here: https://www.themaven.net/mishtalk/economics/eight-...
  • In late 2017, many investors began to think of Bitcoin and other "crypto-currencies" as alternatives to gold. But with the recent sharp price correction and looming legislation to regulate (or even ban) crypto trading, the investment world is realizing that cryptos are not a replacement for a sound money strategy of holding precious metal. Instead, they are at best a supplement to a diverse portfolio.
  • And the long-term price chart certainly looks constructive for a breakout and rally over the next 12-24 months. As you can see below, once price exceeds $1400, the stage will be set for a move toward $1525, and once above there, a move toward the old 2011 highs should be right around the corner.

 

So, how should one look to prosper from this coming rally in price? Of course, there are many forms of "gold exposure" available to investors today, but none of them come with the safety and peace of mind of owning true, physical gold.

 

Consider the following:

  • Unlike the fiat currency of Canada, the US, Europe and elsewhere, gold has been considered sound money for millennia. It stores and retains wealth, while fiat currency is consistently degraded and devalued by the issuing central banks.
  • Physical gold has no counter-party risk. Simply put: if you hold it, you own it. The same cannot be said for hypothecated paper assets like stocks, bonds and mutual funds. In paper assets, the holder always assumes the risk of the counter-party's solvency. With physical gold, this is not an issue.
  • And while the financial world has been relatively stable since 2013—and counter-party risk has been brushed aside—the action thus far in 2018 should remind you that this concern is never far away. For example, consider the recent stock market correction and demise of several volatility-related ETFs and ETNs.
  • Physical gold can either be held personally or in a safe, secure storage facility. Either way, it is your asset, and it provides an insurance policy against financial calamity. You can learn more about precious metals storage here: https://www.sprottmoney.com/media/six-top-countrie...
  • The only real risk that a gold investor assumes is authenticity of the gold itself. Recent news articles have demonstrated the value of working only with reputable dealers selling officially-produced bullion products. By adhering to this strategy, an investor can eliminate any doubt regarding the quality and purity of his or her holdings.

 

The Importance Of Gold In 2018 And Beyond

Sprott Money News

 

Check out these other articles by our contributors:

The State of the Union – Markets - Gary Christenson (09/02/2018)

“The natural instinct should be to buy gold in this kind of environment.” - Eric Sprott on tumultuous markets (Weekly Wrap-up, February 9, 2018)

Gold & Silver / Asset Backed Cryptocurrencies Will Be the Future - Rory Hall (09/02/2018)

The First COMEX Gold Spec Wash of 2018 Is Underway - Craig Hemke (07/02/2018)

Who Could’ve Seen This Coming? - Dave Kranzler (06/02/2018)

Comments

Easyp Tue, 02/13/2018 - 05:56 Permalink

At best Gold Funds, miners and ETFs might see a modest price recovery but if the markets really tanked the US Government would sieze/steal peoples physical gold.

Now pursuade Trump to return to a gold/silver standard for the $ and life would be good for the faithful goldbugs!

Heros Easyp Tue, 02/13/2018 - 06:40 Permalink

Until Russia and China have enough leverage on ZOG to force the central bankers to stop manipulating gold prices, then there will be no dramatic change in PM's and miners.  Expect spikes with slap downs continuing until OBOR is completed, China's south china sea bases are completed, and the zionist run terrorists are chased out of Syria.

Then when the F16's and Marines are no longer able to intimidate smaller countries on the peripheral they will start resisting, and then the PM price controls will crumble.

In reply to by Easyp

LawsofPhysics Easyp Tue, 02/13/2018 - 08:10 Permalink

The US government will not be able to sieze shit you stupid fuck.  If the "markets" really collapsed and all pensions went belly-up it would simply be another Soviet-style collapse where the government would tell you what "prices" were on paper, all the while the real prices on the street would be something else altogether.

Talk to someone who experienced this, there are many around.

In reply to by Easyp

Albertarocks LawsofPhysics Tue, 02/13/2018 - 12:31 Permalink

Confiscation should be the least of the worries of any gold owner.  In fact, a gold owner shouldn't have any worries at all.  It's those who don't own any gold who will have the worries in coming years.

The truth is that in 1933 the US Government didn't even confiscate gold from citizens.  Most of that is a myth.  There were a few times when gold 'was' confiscated (siezed without compensation) but that was when criminal activity was proven.  99.99% of Americans hold their gold legally so it was never "confiscated".  But they were asked to turn it in because holding gold was made illegal.  Even making ownership of gold illegal is unconstituional in my view, but it was done anyway, as a form of bullying for one single purpose... to save the Fed's ass. 

When citizens did turn their gold in though, true enough, they got screwed over royally because they were paid $20.67/oz. for it.   As soon as the deadline passed, gold was declared to be worth $35/oz.  Is it even possible for a government to stoop to any lower form of deuchebaggery than that?  Actually, the answer is... "yes, they do it all the time".  I have no idea why a person would be stupid enough to turn in their gold anyway, but that's a discussion about basic stupidity.

From the article in the link below: "There was no widespread prosecution of individuals who simply owned gold. The cases brought by the government were typically against gold traders, dealers, and companies that failed to surrender large quantities of gold."

https://www.usmoneyreserve.com/blog/did-fdr-confiscate-americans-gold-i…

It is also untrue that gov't officials raided safety deposit boxes.  And they sure as hell wouldn't expect to have any luck knocking on the doors of homeowners and searching their houses for gold, not even knowing whether a person had ever bought any or not.  So they never raided homes either.  If you keep your mouth shut you can own all the gold you want.

In reply to by LawsofPhysics

GunnerySgtHartman Albertarocks Tue, 02/13/2018 - 14:13 Permalink

When citizens did turn their gold in though, true enough, they got screwed over royally because they were paid $20.67/oz. for it.   As soon as the deadline passed, gold was declared to be worth $35/oz.

I would call "being forced to sell your gold to the government at 40% below what the government would revalue it at" a form of confiscation.  What other choice did they have?  Did the government tell the public they'd revalue it from $20.67/oz to $35/oz?  It's not like the public could have refused to turn it in or had the opportunity to negotiate with the Treasury for a higher price.  It was "turn it in or ELSE."

From the article in the link below: "There was no widespread prosecution of individuals who simply owned gold. The cases brought by the government were typically against gold traders, dealers, and companies that failed to surrender large quantities of gold."

A distinction without a difference; a prosecution is a prosecution.  Some of those cases were very high-profile.

https://en.wikipedia.org/wiki/Executive_Order_6102#Prosecutions_related_to_Executive_Order_6102

In reply to by Albertarocks

libertyanyday Easyp Tue, 02/13/2018 - 13:41 Permalink

the end of this fiat fiasco and paper gold/silver manipulation will end.   I am convinced that TPTB are going to instantly return to pm's with the implosion. The avg dunderhead is going to be scared shitless when this happens and btc and digital nonesense wont be believed in ............might be right , might be wrong but 5000 yrs of history is what im betting on.

In reply to by Easyp

InnVestuhrr Tue, 02/13/2018 - 06:01 Permalink

Good post UP TO the sales pitch for Shiny Shit, which earns NO INCOME.

In the 10+ years that the immanent-doom-porn carnival barkers and shiny-shit profiteers have been hyping that we should sell our financial assets to instead buy their no-income shiny shit, I stayed invested in CEFs paying 8+% yields.

Compare the investment results of

(a) 10+ years owning no-income, but very high expense, shiny shit

vs

(b) 10+ years owning CEFs paying 8+% yields per year = lots of real income that paid all my expenses PLUS additional savings every year AND after 10 years I have received in income a WHOPPING 80% of the cost I paid to buy the CEFs, and in 2 more years of income I will have received in income a WHOPPING 100% of the cost I paid to buy the CEFs, so that after 12 years ALL THE INCOME IS FREE *AND* I still own the CEFs !!!

Shiny shit is where money goes to stop working, stop earning, and DIE.

If, according to the doom-porn profiteers, the monetary apocalypse is always so immanent, every day, day after day for decades, yet never arriving, and if shiny is the only thing that can save you from immanent ruin, then why are these profiteers selling their shiny shit to you in return for your allegedly worthless fiat ???? Why would they not keep their life-saving shiny shit ???

And what are these doom-porn profiteers doing with all the allegedly worthless fiat that they are accumulating from the gullible who believe in their endless rants about monetary collapse - are they buying fiat bonds with the fiat loot ????

InnVestuhrr oddjob Tue, 02/13/2018 - 09:55 Permalink

I am very interested in the MJ biz, even to the extent of starting growing and retail operations myself, financed by myself,

BUT

NOT until the militant christian fanatics at the federal level get with the program, perfect examples are trump and sessions. Anyone who fights the feds is taking on FAR GREATER risk than I want - you can not only lose your investment but also end up in prison - before I made that kind of horrific mistake I would use my skills to just steal money instead of investing in new biz, ie very hard work.

In reply to by oddjob

ogretown oddjob Tue, 02/13/2018 - 12:33 Permalink

Yabutt...why do all of these conversations devolve into black-white, either-or?  I stack gold and silver, and have done so for decades. I have also stashed (saved) cash. I have also done quite well with shares in tech/pharma/resource and now block-chain.

To me it is a question of balance while keeping in mind a few basics. Gold is akin to insurance. The value of every piece of fiat currency devised by man has in the end, gone to zero. If you intend to make investing your main source of acquiring wealth, be prepared to monitor the market place on a daily basis. This system has allowed me to live a comfortable life.

 

In reply to by oddjob

InnVestuhrr Sages wife Tue, 02/13/2018 - 11:30 Permalink

Market prices declined in the massive asset sell-off of 2009 BUT dividends continued to be paid. CEFs do not have redemption liquidation risk, unlike mutual funds.

In 2009 I loaded up on more dividend-paying funds at fire-sale prices and now have huge unrealized capital gains that I can harvest anytime I want to sell - IN ADDITION to collecting dividend income every month.

How much income have you been earning on your inert shiny-shit ?

In reply to by Sages wife