The power of fear is amazing to me.
For the most part, otherwise sane individuals will do all sorts of crazy things once things become a little bit dicey.
Want proof? Look no further than the gold market. How else can you explain the massive move in an otherwise worthless metal over the last decade?
If you are honest, ask yourself what real utility is there for gold?
Don’t recite what the so-called analysts or experts will tell you about gold being the only real currency in the world (it is not). Those folks will tell you that gold is the only thing that will protect you and your family when things go horribly wrong (fear mongering).
Really, what do you think the world is going to be like if things do really go horribly wrong? I highly doubt that gold bar will get you much if chaos truly takes hold.
Where’s the cash?
How about inflation?
Those who love gold spew all sorts of nonsense about inflation – again, all of it is fear-based.
The global powers are printing money across the globe. All that money is going to make paper currency worthless. Prices across the board are going to rise in an unrelenting, unstoppable wave of inflation.
If there is so much cash out there. Where in the world is it? I know I don’t have it, do you?
For inflation to truly take hold there needs to be cash dispersed to the masses. That isn’t happening. Not even close.
I’m sorry, but aside from being used in jewelry, gold does not have the utility the market is telling you today, even with the recent selling.
Sure there has been a ton of money made owning gold over the last decade, but that has little to do with true value of gold in a market. What it does tell you is that there is a ton of fear out there and that fear can create a massive bubble in any investment.
The hot new currency
Take for example, hmmm let me see . . . Bitcoin.
You know about Bitcoin, that supposedly hot new digital currency that everyone must have. Come on. Admit it, gold owners. You gave serious consideration to adding some Bitcoin to your portfolio or maybe you actually pulled the trigger and bought some before it collapsed.
You might laugh at the lunacy of Bitcoin, but is it any different than the lunacy of gold?
The answer is no, no and no again. Here are three very simple reasons why gold is like Bitcoin:
- All bets are off during the apocalypse. I’m pretty sure those dreams of buying a loaf of bread with your gold coins during Armageddon might not be as easy as you think. A better currency in that situation might be your gun and its ammunition. Or maybe gasoline, since transport will take on premium value if such a disaster were to occur. I guarantee you the zombies will scoff when you try to pawn your gold for anything of real value in such a scenario.
- When the air comes out of the bubble, the pain will be very real. A near 10% drop in the price of gold in one day is nothing. Bitcoin lost $100 in value in a matter of moments. Gold prices could see the same. Those gold ETFs have disaster written all over them. When the money starts to flow out, there will be nothing to backstop the selling. 10% is nothing to what could happen when gold really starts selling off.
- What someone needs to tell me is how gold and Bitcoin are NOT different. I suppose it is ultimately the market. At the moment the market is telling us that gold is indeed a real currency and Bitcoin is not, but frankly the two are more similar than they are different and that should be cause for alarm for anyone that owns gold.
I can imagine the hate mail and negative comments I might get for raising this issue, but I stand by my beliefs: gold could collapse no differently than what happened with Bitcoin.
If you own the yellow metal, don’t be a fool. Take some of those fat profits off the table before it’s too late.