Mike Maloney’s Top 10 Reasons to Buy Gold and Silver: Part 2

Mike Maloney’s Top 10 Reasons to Buy Gold and Silver: Part 2

Yesterday we explored the first half of Mike Maloney’s Top 10 reasons to buy gold and silver. You can read about them here. They were: 

10.    All the world’s currencies are fiat and all fiat currencies eventually fail.

9.    The current state of the global economy.

8.    A new world monetary system.

7.    Gold and Silver come with a central bank guarantee.

6.    Everything else is a scary investment.

Today we continue with the Top 5.

5.    Market psychology.

“The bull climbs the stairs, but the bear jumps out the window”, meaning it can take years to create a bubble but only days or weeks for it to burst. This is particularly important to remember for gold and silver investors who may need to wait for an extended period of time for the big moves to come (on the back of chaos in other markets), but when they do they can be breathtakingly fast.

4.    This time it really is different.

The differences between the precious metals bull market of the 1970’s and the great gold and silver rush of today are vast. In the 1970’s there were only 2 major exchanges which set the price of gold - one in London and one in the US, so therefore only about 10 percent of the world population could participate in that great gold rush. According to Maloney this time it is the entire planet. Today there are almost 1,500 billionaires in the world living in more than 50 countries.

Further, just about every country has expanded their currency supply about 10-fold since the 1970’s meaning investors have potentially more money in their pockets. Back in the 1970’s most people were savers, however with the ever-increasing inflation, savers were punished whilst investors and speculators were handsomely rewarded. This has led to the extraordinary development of the investor mindset in countries around the world.

3.     Gold & Silver should buy a whole lot more than it currently does.

In ancient times there was only one place to store your wealth, the real money of gold and silver, whereas today there are many financial assets you can use to build your wealth which all end up diluting the purchasing power of ALL stores of wealth including gold and silver.

In a time of crisis with the debt and fiat currency bubbles imploding most financial assets will become like hot potatoes which will in turn bid up the price of hard assets such as gold and silver. Today, there is on average approximately $40,000 per person of liquid financial assets versus approximately $200 per person of investment gold bullion. That is a 200:1 ratio. That means in a financial crisis if just 10% of the money currently invested in financial assets were to come chasing the security of gold, the price of gold would rise 20 fold, bringing the ratio to 180:20. In today’s prices that would bring the spot price of gold to over $30,000AUD! 

2.    It’s all happening at once and this time its global.

•    There is more “stuff” per person than at any other time in history, but the same amount of gold.

•    Competing financial instruments are diluting the purchasing power of gold.

•    Today there is 200 times more wealth stored in these competing financial assets than there is invested in gold.

•    If just 10% of this wealth flees to gold in time of crisis, the gold price will rise 20 fold.

•    Maloney sees the coming crisis causing a lot more than just 10% of wealth fleeing financial assets for the “safety” of hard assets.

•    Budget deficits, trade deficits and government debt are at all-time highs. Real estate, stocks and bonds are all in bubbles as are the credit, debt and derivatives which are threatening to take down the world economy.

•    It took years to create these bubbles but it will only take days or weeks for them to burst, and ALL bubbles eventually burst.

•    Greed and fear are the most powerful emotions which drive investors and it will be fear at the forefront in a time of crisis.

•    Today there are 10 times the people, each with 10 times the currency, and somewhere between 10 and 1,000 times the number of people with an investor mindset than the last time there was a great gold and silver rush. That means there is somewhere between 1,000 and 100,000 times more currency that will come chasing gold and silver this time round.

•    For the very first time all of the world’s currencies are fiat currencies and all fiat currencies eventually fail.

•    Every country on the planet is creating currency on a suicidal scale never imagined.

•    Every 30 to 40 years the world has an entirely new monetary system.

•    We are overdue for the transition to a new monetary system.

All of the above are the recipe for an unprecedented economic event which will be the greatest wealth transfer in history.  An event in Maloney’s words that “can either impoverish you, or can enrich you beyond your wildest dreams.”

1.    I sleep better.

Gold and silver has always been a “hedge”, an insurance policy which a prudent investor would ensure is part of a diversified portfolio. It is much easier to sleep soundly at night when you know your financial future is adequately insured, regardless of what happens in the economy around you.