“Sharing horizons that are new to us
Watching the signs along the way..
Workin’ together day to day, together..
We’ve only just begun..”
By: Joshua Gamen
I find it a little bit crazy when people say that precious metals are in a bubble that is about to burst. While I do believe that gold and silver will be the next great bubble, I do not see them anywhere near bursting quite yet. I know that people are starting to get on the Dow bandwagon right now as it has been steadily going up recently too, but the Dow is just keeping pace with the rest of the commodities as the dollar becomes more and more worthless.
Value transfers. And it transfers from one commodity to another. There is only so much real value in the world, and this real value comes from what we produce as society, as well as the natural resources that we have. Now the amount of value can be manipulated by creating a fiat currency(fiat = nothing attached to the currency, ie: gold), but eventually there will become a natural balance as the amount of currency gets too far out of whack with real value, and then we see the existing currency become devalued so it just takes more currency to buy the same good or service that you were getting before. When this happens and people see their dollars becoming worth less and less, they lose faith in the dollar, and buy things of tangible value. This is what we are seeing start to happen right now. If you look at what has happened in the last week since the Federal Reserve stated they would begin “quantitative easing,” or as I like to call, “inflation on purpose,” you will see that all commodities are rising fast. It is tough right now to know where to keep your money. If you save your dollars, you will get absolutely sloughtered. If you buy stocks, you are at the mercy of Wall Street and speculation. People are scared of real estate after the recent bust from that market, and it is very difficult to know where to go. Silver and gold have always been used as a hedge against inflation and sought after in times of currency uncertainty.
By now we should all be at least somewhat familiar with how value bubbles work. Most recently we saw the largest real estate bubble in history. This giant real estate bubble got larger and larger as derivatives kept pushing the bubble and allowing for expansion, until finally there was no physical way to sustain the interest payments on what was funding the bubble. It got to it’s bursting point in 2008 after borrowers could not keep up with the interest on all of the debt which had been created to keep the bubble going and expanding. Now people are back to reality and seeing housing for what it is again, shelter. (This is not to say that real estate cannot be a great asset. It is tough to buy a better asset than cash-flowing real estate-ie: rental property that pays you more per month than it costs you to own. You get cash flow, plus tax advantages, and possibly even a little appreciation if you are lucky and catch the right cycle 😉
Gold and silver have been the true reserve currency for the world since the beginning of civilization, and if you look at what the Fed is up to, you cannot help but see the writing on the wall.
The gold and silver bubble will burst, but I do not see this happening before a GIANT craze. I think it is a reality in which we see people lined up outside coin/bullion dealers awaiting to exchange their devalued currency. I honestly think it will get that insane. Look around town, you are already starting to see “we buy gold” everywhere!
I think we are a long ways right now from the burst of precious metals! The momentum is just starting to gain steam and the people are just starting to catch on to the trend. Once the mass is on to what is really going on with the Federal Reserve, expect to hear numbers you never dreamed of. Just since September, we have seen silver break through $20 and all the way up to what I am currently looking at($27.76 per ounce)!!! Since the elections and news from the Fed last week, we have see silver go from $24 per ounce to almost $28!!!! Silver has been around since the beginning of time – insane to think about this high of a % increase in week!
Do what you can during these times to protect yourself and your loved ones. Keep educating yourself on how money works, after all, in this economy – knowledge is the new currency! If we all keep up on what is going on, and work together to find a solution, we will all live in a better world. Godspeed.