During these uncertain times, how do you summarize the opportunity for investors in both gold and silver?
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Free Prepare & Diversify with Gold & Silver Report
Many investors are faced with the challenge of having to prepare their portfolios during a time of economic uncertainty. To help investors prepare, Monex is now offering our customers and prospective customers open access to the latest available analyses, forecasts and recommendations on investment diversification with precious metals from the widely-recognized financial market analyst, author, and Managing Partner of CPM group, Jeffrey Christian. When you discover what is presented in these reports, you'll see why we here at Monex believe it is urgent to consider diversification with precious metals. For your free reports please speak to a Monex Account Representative now by calling 1-800-444-8317.
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Jeff Christian: We look at gold as something that has numerous beneficial effects for investors or people. Gold is a great store of wealth, it's a portfolio diversifier for your wealth, it's an insurance policy against cataclysmic problems, it's a portfolio diversifier for your investment portfolio, which is a sub-set of your wealth, and it's also an asset that can give you good capital gains at various times, especially if you're astute. I think, a lot of people make the mistake of imbuing too much into gold and they hold on to it.
I think, there are two big mistakes. First off, people make the assumption that things are bad and they're going to collapse. Historically, if you look at the last 400 years of history or more, what you find is that the financial system goes through really bad times, but it tends not to collapse. There are political, economic, and human reasons why things are patched together. So, we've had numerous crises and we've always pulled back from them. The system really hasn't really collapsed completely and when it does collapse, as in World War II or the Great Depression, it comes back.
So, I think, the first mistake that a lot of investors make is they assume the worst. They look at all of these bad things and they say, "This can't be sustained," and for 50 years they've been saying, "This can't be sustained," and yet it has been. That's not to say that it won't collapse tomorrow, but what it is to say is that probably what we're going to see is more of the same, as opposed to a collapse. I think, that the risks to financial calamity are great today than they have been since the Great Depression, but more likely what you're going to see is sub-par economic growth, low interest rates, higher unemployment as computerized manufacturing takes over jobs around the world, and a variety of other problems that will continue to constrain human life, liberty, and happiness. I think, that in that environment, gold also makes sense.
So, I think, that people make two mistakes. First off, is they assume it's a black or white political economics situation--it's either going to collapse or it's not going to collapse, or it's going to be good and the reality is that there's a great in between, which is where we spend most of our lives. Then, the second thing is that they see gold only as that catastrophic insurance and they miss out the opportunities to take profits. I have clients, billionaire clients, who bought silver when it was $4.85 and they sold it when it was $13 and they were very happy. I have other clients who bought silver when it was $13 and they rode it up to $50. They didn't sell it, even though we were telling them this is the top, sell it, but they were convinced it was going to go to $150 or $500 and now it's back to $16-$17, as we talk. They say, "Well, yeah, I'm still up like 30%, so it's ok," but they could have been in much better position if they had not believed that: a) the system was going to completely collapse and b) that silver was going to do something that fundamentally didn't make financial sense. I mean, if you look at silver mining production, secondary recovery, fabrication demand, and investment demand, $150-$500 silver, does not make sense at least for many, many, decades. The idea that silver could go back to $40 or $50 over the next 10 years, that's a much more probable or possible scenario and if you saw $40 or $50, you probably want to take profits depending on what the situation is at the time, but people tend not to do that.