What Will it Take?
David Schectman

What will it take?  I've been following the price of gold (and silver) for 30 years.  I have always wondered – what will it take to get the average American interested in precious metals?  What will it take to launch gold into the "parabolic stage" that we haven't experienced yet?  What would it take to ignite the awakening?

When Y2K arrived I wondered, would this be the spark?  It was not.  When the stock market bubble popped in late 2000, I wondered, "Is this the event?"  It was not. When the real estate bubble popped in 2008, along with the derivatives bubble, I thought, well maybe this time?  It was not to be.

Backwoods Jack asked me how come the war in Iraq and Afghanistan, Arab Spring, and the Iranian nuclear issue haven't resulted in an explosion in the price of gold.  Clearly, they have not.  The near-collapse of the PIIGS was, as far as gold is concerned, a non-event.  Nor have QE 1, QE 2, Operation Twist and the Fed's announcement that they will keep interest rates near zero well into the future, and that they will purchase $85 billion in mortgage bonds and Treasury bonds every month. So I ask myself, for the umpteenth time, what will it take?  There IS a Black Swan event out there that will be the fuse, but trying to predict what it is or when it will occur is futile.  The last 30 years has made that clear to me.

I can, along with Bill Holter and Andy Hoffman, argue that the end game IS a mathematical certainty.  Of that, there can be no rational doubt.  What I also know is that since we can't know "what" or "when," we must be early – we must prepare in advance.

For those of you who were early, there is comfort in knowing you were not foolish.  If you bought gold at $300, or $500, or $750, or $1,000, or $1,250, or $1,500 or even $1,600 – you have done well.  The earlier the better!  I am as certain as certain can be that those of you who bought your gold at $1,900 will be thrilled with the purchase later this year – or next.  It doesn't matter, because this is not a contest to see who can buy at the lowest possible price, because that is impossible unless you are just plain lucky.  All that matters is who WINS the game.  I say, those who own a lot of gold and silver and very little dollars will be the winners, the big winners.  If your only "sin" is being early, you are already ahead of the game.

Gold and silver are your insurance policies meant to protect you against the "Black Swan" event that we cannot know in advance.  The Swan is out there.  I can't help believing that it will pay us a visit sooner rather than later.

The fact that I am worried about all of the previous events mentioned above, that did not cause a collapse of the economy, the currency or an explosion in gold and silver is irrelevant.  My gains are huge.  My portfolio is positioned to survive any Black Swan event.  I am not doing it to make a killing.  I am doing it to avoid being killed, financially speaking.  And meanwhile, my wealth has been virtually entirely in the number one and two performing assets over the last five and ten years.  And the best part is, the best is yet to come.  The biggest gains are ahead of us.  My biggest failing is being too early and it turned out to be a blessing.  And all of the above can be said for my readers who have taken my advice.  I don't hear any of you complaining of your gains. 

Anyways, who wants to see things fall apart?  Unfortunately, for millions of Americans, things have already fallen apart – as demonstrated by the 24% unemployment number (Shadowstats).  That number is something last seen during the Great Depression.

You can view the future, the future of the dollar, the economy and the stock market through my prism – or you can view it through the eyes of your money manager, financial advisor or stockbroker.  The choice is yours.  Apart from being early, I rest on my record!

Time to throw out my prediction of the real Black Swan event. Here it is:

Rising interest rates, causing a collapse in the biggest bubble ever, the bond market.

I take comfort that Bill Gross, THE bond maven agrees.  Let's just hope it is a long ways off.  I give it two or three years at the outside.  But, I have been wrong before.

Good luck to us all!

blog.milesfranklin.com