Cancelling Insurance Before the Storm

Yesterday’s article touched on the term ‘insurance’ as a reason to own gold and silver.  Some people don’t like that term as a reason to buy gold and silver as they are doing so as an investment for capital gain based on ‘buying low and selling high’.  The word ‘insurance’ puts some off as it implies zero return.  Have a look at the last 10 years and gold is up 127% - hardly zero and better than most shares or property.  For many the golden rule of investment is preservation of capital, with a search for yield and capital gains secondary depending on one’s appetite for risk.  Call it insurance or call it preservation of capital, an allocation of your savings in to gold and silver has never looked more prudent.  We won’t go over old ground (you can read back our daily articles) but no one, no matter how bullish, can deny the world is in an unprecedentedly dangerous economic position.  

However on the back of the rising USD we see gold and silver spot prices currently at over 5 year lows.  It’s enough to test the resolve of many investors.  Again we remind you that in AUD both gold and silver are still up around 4% for the year (and the All Ords is down by 4.5%).  You will find articles predicting a lower USD spot price but you will be hard pressed finding the same on AUD gold and silver.  Many believe the bottom is in.  Frankly, none of them really know and that is why you balance your wealth, having a bit of everything.  But in times such as this, with record high debt, historically low growth, unprecedented monetary stimulus deployed around the world and the growing threat of outright war – gold and silver simply must be considered as a sizeable percentage of your savings (and of course now on sale at ‘bargain prices’).  Bill Holter put’s it simply:

“Let's ask a few questions to put this in perspective.  If your local forecaster showed you the radar of a cat5 hurricane out in the gulf moving very slowly toward you, is there anyone or anything that could get you to cancel your homeowners or flood insurance?  This is the case in today's financial and geopolitical world.  You see daily where leverage has risen to previously unseen ratios.  You have watched as interest rates around the world have been zeroed out and in many cases have gone negative.  You see reported economic numbers that make no sense and are regularly contradicted by real world experience.

We mathematically have the largest financial hurricane of all time coming and will be a direct hit worldwide.”