By MoneyMorning.com.au
Just as the Archbishop of Canterbury isn’t likely to preach from his pulpit that there’s a chance God doesn’t exist… it’s clear the Archbishops of Gold and Bishops of Silver weren’t about to admit the price of gold and silver could fall… or even just hold steady.
Of course, that’s no surprise when you consider how invested they are in the idea. In terms of their own and their clients’ wealth.
It was interesting to read how the collapse of futures trading firm, MF Global impacted the wealth of another gold bull, Gerald Celente. Business Insider reports:
“Everyone’s buzzing about Trends Research founder Gerald Celente’s recent interview on RT America, where he railed on MF Global for taking his money and closing his positions on gold.
“On RT America, Celente denounces MF Global, saying he was building up collateral in his account in order to receive gold contracts due to deliver in December. But then, he received a margin call and a broker told him his money (up to 6-figures) was with the court-appointed trustee.”
In short, according to Celente, he only owned gold futures contracts so he could lock in a price today, save up and then take delivery of the physical gold in the future. That’s fine, and good luck to him.
But to our mind that’s like a housing investor insisting they’ve got no debt, but they do have a mortgage over a property… but only so they can lock in the house price today while saving up to buy the house in the future (mortgage repayments).
Either you’re leveraged to something or you aren’t. Even if you say you’re saving up for something… if you buy today without making the full payment, you’re leveraged. There’s no getting around it.
That’s one of the dangers of holding a religious-like view on any investment. You can become so convinced you’re right that you start taking more risks than you should.
So for sound money advocates to use highly leveraged (read, risky) financial instruments to buy “paper” or “electronic” gold… well, it doesn’t add up.
Bottom line, attending the Gold Symposium was a landmark event for your editor. We’re still bullish on gold. We’re still bullish on silver. And we’ll continue to hold on to every ounce of our investment (plus, we’ll buy more over time).
But it did confirm something we’d knew all along…
It’s important to have a Plan B investment strategy.
Western governments, central bankers and organisations like the IMF have manipulated the monetary system for 70-odd years. So who’s to say that won’t continue?
And who’s to say it won’t result in stocks recovering and going on another credit-fuelled bubble?
Our view is that won’t happen. That’s Plan A.
And that’s why we invest in cash and gold. But what do we know? What if we’re wrong? Well, that’s why we’ve got Plan B… It doesn’t mean we’re any less committed to Plan A.
It’s just that we know we aren’t God. We can’t predict with 100% certainty when an event will happen.
That’s why we recommend investors have some stock investments. Enough to benefit from another possible credit-fuelled bull market, but not enough to break the bank if we’re right and the global economy and stock markets crash.
Cheers.
Kris.
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From the Archives…
The Onward March of the State
2011-11-11 – Kris Sayce
Lose a Shirt, But Gain a Wardrobe
2011-11-10 – Kris Sayce
Neither a Borrower Nor a Seller Be…
2011-11-09 – Kris Sayce
Roman or Zimbabwean
2011-11-08 – Kris Sayce
Lighting a Match to Inflation
2011-11-07 – Kris Sayce
For editorial enquiries and feedback, email moneymorning@moneymorning.com.au