Blinded by hopeful expectations!
It is speculated that the Federal Reserve will maintain the pace of monetary stimulus to boost the economy. This means that money will remain cheap while driving the inflationary pressures of money expansion. This change of course has caused many people to realize again, that gold and metals are a good place for a store of value.
For many of you, I am sure your wondering why the economy is behaving the way it is. Your probably speculating why gold went down while the U.S. government was shutdown? There are no clear answers to all these questions. We know that that there are forces that cause the economy and the perception of the economy to react. In the past year, money has moved towards equities as a place of investment while not fearing inflationary pressures through fed policies.
For years, people have feared inflation and even anticipated it. However, this story has gotten old and people doubt its reality. People are wanting “NORMAL” back. People truly want to believe in retirement security. People want to believe in Social Security. People want to believe that taking a mortgage is safe again, because surely tomorrow will resemble today. There is elasticity towards the norm that creates a reality resembling the “normal” simply because of mass expectations. The only time this doesn’t work is when there is also a real and believable reality to cause panic.
The result is that as long as economic patterns can remain stable, the norm will be the reality. If the worst case becomes inevitable, then the swing towards security will become fast and decisive. This is what we see when people run towards gold and then turn away. The price goes up and goes down…There is no general trend.
My recommendation is that metals are ultimately an insurance. You can invest in Gold insurance through stocks, physical metals, private mining companies, and a few other opportunities. These investments need to be seen as insurance policies and remain faithful to understand that someday you will be glad you have already made this allocation. However, if you do not make this allocation or divest your position, you might find yourselves being too late. If world economic crisis and inflation does happen, then the time to invest would be yesterday, not tomorrow.
Gold has dropped 19% this year, heading for the first annual decline since 2000. Some investors lost faith in the metal amid a rally in U.S. equities and low inflation. I recommend holding a reasonable position always. You only worry about storms when there is no shelter to protect from disaster. Take this worry off your table. Don’t be blind! Be wise!
