There’s been lots of talk about the “gold bubble,” especially from mainstream talking heads and analysts who prefer paper over real money. In January 2010, financier George Soros was quoted as saying “the ultimate asset bubble is gold,” and this really got the financial news wires going.
We agree, gold is the ultimate asset bubble. However, most people totally misunderstood what Soros was saying. Our view is that George Soros was not suggesting that gold is currently an asset bubble, but that it will eventually become one.
Take a look at this chart from Daily Wealth and a brief explanation from Brian Hunt:
Remember, gold is one of the world’s most volatile assets. The metal cannot be valued like a piece of real estate (using rental yields) or a share of stock (using book value). It can trade on all kinds of wild emotions. Thus, huge gold price swings have proven to be the norm… not the exception.
Given gold’s volatile nature and the recent price weakness, we again urge folks to take “long view” (aka the “rich man’s view”) of gold… and note that gold could fall all the way down to $900 per ounce and still remain in the confines of its bull market. It would also be a wonderful chance to buy more.
We’ve seen gold decline roughly $100 over the last 30 days, and we are hearing again how the air has been let out of the gold bubble.
But has gold achieved bubble status yet?
Our opinion is that gold is nowhere close. We haven’t even achieved the inflation adjusted highs of the 1980’s gold bubble as of yet, which would put gold somewhere in the area of $2300.
Most of our readers would agree that we still have quite a bit of time before this economic crisis turns into a recovery. As we’ve pointed out, dysfunctional states have yet to go to the federal government for bailouts, and the federal government itself has done absolutely nothing to curb spending or resolve fundamental issues facing our economy.
If you consider that unemployment will likely continue, resulting in even more foreclosures and less consumer spending, we can see that the negative feedback loop is far from being closed.
The problems with the economy and financial well being of the United States will lead to even more volatility in markets and society going forward.
The populace is already losing confidence in the government sector’s ability to mitigate the crisis, as demonstrated by Congress’ recent approval ratings of under 15%, as well as those of the President, which have declined to around 45%.
We’ve noted before that Gold is often considered to be an inflation hedge. But if you look at the precious metal historically, it’s not inflation (or deflation) that drives gold up, but rather, a loss in confidence. When the private sector realizes that government is not only unable to fix our problems, but complicit in making them worse, that’s when gold really shines.
When the financial, economic, political, and monetary outlook is darkest, that’s when we’ll see the next great gold bubble come to fruition.
So, George Soros will be proven right. As other assets around the world crash – things like real estate, stocks, paper monetary systems and living standards – we’ll see capital flee to the safety of the only wealth preservation monetary asset that has survived the test of time. If you don’t believe, just ask the Greeks why gold was selling at $1700 an ounce only a few months ago.
It will be an extremely volatile ride going forward, perhaps to the point where you’ll hate your gold so much you’ll want to spit on it. But don’t sell unless you’re sure that global crisis has turned to recovery and growth.
Gold will eventually become the ultimate bubble – you can bet on it!
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The more that the TVÂ talking heads (who are paid by corporations like GE whose assets are in stocks) denounce gold,the more I will buy.
How can anyone sleep soundly knowing that all of their wealth is in paper dollars?
If you understand gold, Â then you do not worry about how it is priced, in paper dollars.
Consider that in 1930, a $20 gold piece was interchangeable with $20 bill. Â One man hid 50 Â $20 gold pieces, under his bed, and another man hid 50 $20 bills under his. Â In 1930 both were worth $1000.
Today, the man that hid 50 $20 bills under his bed has $1000,  but the man who hid 50 $20 gold pieces has, at today’s spot of  $1160 , has approximately  $58,000.
In 1930 , $1000 would buy you an expensive car. Â That same amount of gold, today will still buy you an expensive car.
Now, in which one, do you want to store your wealth?
I think ill choose door number 2Â please!
($20 gold pieces under my bed).
I also think that they want the price of Gold and silver to plunge so it will deter investment and meanwhile the banks and the elite can buy it by the handfulls cheap .There is a Reason for this 1099 thing (Anything over 600 bucks must be reportable) because they want to be able to get there money on billions of dollars on Taxes when gold/silver explode in the next 3 years . But im saying if the price drops that low you just keep buying,make it a monthly habit especially if you dont invest in 401k or retirement plans.
People have to remember that investing in the metals isint a get rich scheme, its just a preservation of weatlh versus inflation in the long term and it also gets you out of the fiat dollar system .
Gold is going to be around when the dollar is nothing but a distant  Relic from Generations past . Also dont forget silver its a worthy investment as well and the avergae man can afford thaT. THE NEXT 3 YEARS ARE GOING TO BE VERY INTERESTING AND  HISTORY CHANGEING !
I much prefer silver to gold myself, just a personal preference, because I feel that silver is very undervalued at the current value ratio. But whatever you do, if you are buying PMs; please, PLEASE, PLEASE DON’T:
1. Don’t buy paper certificates proporting to show that you own X# of ounces of silver or gold. The companies selling these certificates and claiming to hold the metal in their vaults for delivery to you at a future date actually own maybe 1 actual ounce for every 100 ounces that they have sold. Take physical possession of any PMs that you buy.
2. Don’t store any of your PMs in a bank safe deposit box. There will be a ‘bank holiday’ during which time you won’t have accwss to your safe deposit box. When you finally gain access to your bank safe deposit box, you will find an IOU from the government instead of your PMs.
3. Don’t buy online or using credit/debit cards. Buy from a local coin shop for cash. Otherwise you leave a ‘trail’Â (breadcrumbs?) right straight back to your front door.
The f—ing government is so broke that they will soon stoop to any level to obtain your PMs without paying you just compensation.
It’s happened before, PLEASE don’t think that it can’t happen again.
Gold, Gold ,Gold!!!…Mr. Doe, how will you be paying for your Gold today?…Paper or Plastic?….yea, put it on my account I’m good for it, are you?
Anyone reading this, I’ll sell you all the paper Gold you can carry…at $500 a ounce…just read the fine print…Redeemable only in “Paper” and only if the” SHTF” ….phone lines are open
in the eventual dollar collapse tiny little junk silver coins will be barter king…
I’m into the junk silver personally. Â Gold coins are not out of the question for me, but I like feeling like I’ve got some weight in my hand when I leave the coin shop. Â Naturally, I use my “patented No Paper Trail Method” of purchasing (follows);
1; Â go to bankster and withdraw fiat currency.
2; Â go to coin shop and trade fiat currency for silver coins of my choosing from the coffee cans they keep in the back.
3; Â drive home and fondle silver coins. Â Put silver coins in leftover Crown Royal bags (I have MANY). Â Hide.
Sounds goofy, but it’s on the way home for me (bank and coin shop in same parking lot) and there is no trail.
My kids are my gold and watching them grow is the increase in value that is priceless. My PMs come in 30, 38, and 45 cal.
Don’t under estimate precious metal #82.
Comments…..jonnyv, you are not the only one using that technique to purchase silver. I use the exact same method. Pay for silver with cash. No paper trail. I regularily buy whatever quantity of silver that I can afford, mixing silver bars, silver dollars, and junk silver in my regular purchases. My fav is the junk silver. Small denominations very tradeable in the future. I don’t woryy about price spikes, or price drops.I keep my eyes on what I think is going to happen in the long run.
    history is a great teacher. Gold and silver have been a store of wealth for thousands of years, and I don’t see that changing anytime soon.
Greaseman, that’s it! Â they charge a “double premium” for the Morgan dollars, so I don’t get too many of those. Â Mostly, I just pick out some small bars, and then I rummage through the junk cans. Â I get whatever coins look good at the time. Â Take em home and polish them up, what ever, I’m not worried about collector value. Â I hold them for myself. Â They were junk when I bought them, right? Â I don’t pay big premiums, and I have the stuff with me where I can protect it. Â That’s all I want.
If anyone hates their gold so much they want to spit on it they can always send it to me.
Comments…..
I have saved silver coins for years and have acquired a few gold coins about two years ago they alone have jumped a bunch. My wife has in the past thought I was going nuts. I really got on an ammo purchase program. And I mean got serious about it. I have been buying 7.62×39 by the crate, and I don’t even own an AK. She said, what in the hell are you going to do with all of that 39? Two things, it will either feed us or protect us. My theory is if the mess goes south. Gold and silver will be a nice barter device but, it can be taken from you if you can’t defend it, and what is the point if you are dead? Those rounds will wildly escalate in trading value if SHTF. Â
 I don’t know where it came from but I think it fits here,
A rich man invests in gold
A wise man invests in lead
well you all said it, so nothing more to say, except perhaps to ask… If you are online via a wifi hotspot, a connection not in your own name that is?
If not, and you want to be very secure, then bury those PM’s deep, and not anywhere near your home unless there well hidden from metal detectors.
It sounds paranoid but recently I read an article on hiding food that made reference to farmer’s wives during the civil war. Aparently they had to hide their food supplies in barrels, and bury them deep, deeper than the bayonets the soldiers used as they scoured the ground around the farms for hidden supplies.
Food for thought’
Hammerun:
No issue with your brass and lead purchases…but without some “wood and steel”, they are only worth half what you paid for them. A $300 SKS would enhance their value significantly.
You may end up hating your gold so much you want to spit on it ( I kinda doubt it ), but you WILL end up hating your Federal Reserve Notes even more, as you’ll find they make lousy toilet paper.
Our economy is based on employment that provides a paycheck. Given the current problems our economy has, the average American worker can’t afford to store enough precious metals to pay for everything they will need for the rest of their lives. Precious metals are a short term solution. I would like to have gold & silver for times when nothing else will buy what you need. But I would have more comfort in having enough food and clean drinking water to stave off hunger and thirst for several years. If we do not recover from this economic debacle, and in fact things get worst, that which you can eat and drink will have more value than precious metals.
Prosperity for the average American equates to jobs, jobs, jobs. To simply exist requires food & water. There are tens of thousands of Americans now living in campers and tents. Rich or poor, you have to eat to survive this Depression.
I own 10 oz of gold, and do so for one sole purpose. As the value of the dollar drops, the value of gold will rise. I still owe $50,000 on my mortgage, and when gold is worth $5000 an oz,. I will sell it for those worthless dollars, and immediately pay off my mortgage, because it is denominated in worthless dollars as well. But of course, only if there is time to pay it off and get the title. There are those who say keep the gold, because no one will be coming to collect on the mortgage anyway, that possession is 9/10 of the law and all of that. I am just not built that way, which is why I prep, I guess.
As far as lead goes, I have plenty of .308, 5.56, .38 and .45 stored up. Enough to supply a third world army as my wife likes to say, but i will never trade it or sell it, as its for my family’s use only. You see, I have a fear of supplying the local gang with combat ammo. If I did sell it, its my belief that I have many more armed thugs to have to deal with when it gets dark, and I particularly do not want my bartered ammo coming back home at muzzle velocity.Â
I have however, stocked up on one particular variety of lead for barter, which is in the 22 long rifle variety. Yes I know, I can get killed with 22LR just as quickly as a .308, however, my thought is the type of person who will buy 22LR will be generally be looking to provide and defend first, and to attack me or anyone else last.
my 2c.
Comments…..
Mike;
 The 7.62 x39 was an investment. I didn’t say anything about the 22, 9mm, 44, 5.56, 7.62×51, 7.62x54r, 16 lbs of Red Dot, 8 lbs of Herco, 8000 209 primers and the steel and glass that goes with it all. The 39 is a common round and I know there is a pile of folks around me that owns AKs, and SKSs. An AK/SKS is not my cup of tea. The Theory; most people don’t keep hundreds of rounds lying around, they go out and blow it away. Some might have a couple of boxes but not a sufficient amount for a defensive action. If you had an AK and you had no cartridges for it and couldn’t get them, what good will it be. You might want to trade it off or trade something for the cartridges. However though on another note, the UPS dude and I talk quite a bit (we are both kinda gun nutty and he knows what he is delivering, it’s only obvious) and I asked him how much ammo he was delivering here in this little town. He said the last 18 months it has been heavy, real heavy. He took a shot and thought he might be delivering now down to between 15 to 30,000 rounds a week. The population here is 32,500. Holy Crap!!!
 Just taking a guess, this little burg night not be a good place to force an unpopular policy.
Of late, I have surmised, the experts may be wrong yet again! Wrong on what count? The scenario of violent events at the fall of our economic system. Other countries which have fallen have not had as armed a populace as the US.
It seems reasonable to me to assume there are more good people with guns than there are bad people with guns. I think after a few weeks, the out-numbered bad guys will be defeated by little old ladies with guns in their top drawers, not to mention more aggresive vigilantes intent on defending their homes and way of life. I think after less than 3 weeks, certainly within 3 months! There just won’t be many bad people roaming the streets looking to terrorize citizens.
We may even like the ensuing sanity, enforced by each individual member of society, and not special interests who had gotten too expensive anyway. The main problem will probably be after 3 months, when people ‘from the government’ start coming around again!
Comments…..
Joeyt;
 I am in agreement with you and some of your assessment. The first 6 weeks is going to be rough, real rough. The first 2-3 weeks will be absolute pandemonium. Hunger, crime, mental diminishment, panic. A time to be real alive with your eyes and ears wide the fuck open. Get your family and friends close and exercise charity and karma wisely. The very second you sense danger; react without hesitation, I am sure our instincts will kick in here, our lives might/will depend on it. Forget and change the ways you have operated in the past. Adapt to a quickly ever changing environment.
 Most of us have no idea what a desperate person will do until we are faced with it.
Imagine for a second; people are going nuts and striping out the local Walmart and all of the gas stations and grocery stores to the shelves.
 Do you participate or defend? Do you have enough to ride this mess out? Where’s the wife and kids?   Communication is down, all of it. Do you have any of the little things, milk, eggs, gas and the like. What haven’t you thought of?
 We have had this type of conversation before and have made changes in an attempt to ward off some of the immediate concerns. Food, fire, water, shelter, defense.
 How much is enough? How long is this going to be?
 There are a lot of things that a majority of us have never had to deal with.
With a Big “IF†this goes down in all likelihood a lot of us won’t survive. And if this goes down here in the US, my belief is that it is planed that way. As unfathomable as it is to think of, there exists some evil people in this world, and my belief is that they are in play here. I personally don’t think they have the guts to come out and face us. Not a chance. I believe their weapons of choice are going to be hunger, genetically altered viruses and each of us against the other. Â
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Many people are assuming the H20 will come out when the knob is turned. Many will fight to stand in line to get some from an armed guard.  Learn how to recover rain water/drill a shallow well. Learn how to produce it from salt water if you live along the ocean. You can even produce water with a portable ac on wheels & small trifuel quiet gen while keeping cool. British Berkey water filter with white 9in filters for a birthday present. Don’t count on a few normal people working at the water treatment plant/electric authority while interesting times take place.Â
This is a good article on water purification with calcium hypochlorite, (pool shock). A 1lb bag treats up to 10,000 gallons of water and far more effectively than chlorine bleach and lasts longer too. This is a good read. I found the good stuff at the local pool supply store.  In case they ask and they might, you are using it for emergency survival water purification. Or your pool, what ever. Apparently there is some kind of other questionable  uses this product can be used for.
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http://www.survivalistboards.com/showthread.php?t=115642