By: John Fisher – Supporting material from Alex Stanczyk of Anglo Far East
A few thoughts on what’s happening in the markets these last couple of days…
The world markets went berserk with riots in Greece as their bond markets disintegrate.
Yet if you hold gold and silver, there is confidence and peace knowing that as things get worse, the more valuable gold and silver become.
The key thing to remember is that the Debt-to-GDP ratio of the US is not much different than that of Greece. However, the world is making a big deal over Greece and as of yet not a big deal over the US.
If you remove “Greece, Spain, Portugal, etc.” and insert “California, Texas, New York, etc.” in their respective GDP placeholders, you will understand the magnitude of this problem. California alone is the WORLD’S 8th largest economy. California is effectively insolvent. If you think this scenario cannot repeat itself in the USA, then you are hoping against hope.
One of the best measures of volatility is the VIX, or “Volatility Index.” This index essentially measures the amount of fear in the world when it comes to the economy. The chart below is telling us that the world is almost as scared as it was in the Meltdown of 2008.
This of course caused the DOW dropped precipitously:
And Gold, of course, increased in value:
Remember that during times of great change, many are moved by fear. This is because they do not understand the root cause of what is really happening. Hence, they don’t know with certainty what action to take moving forward.
However, where there is great change, there is great opportunity!
A Chinese proverb goes, “When is the best time to plant a tree?” Answer: “20 years ago.” “When is the second best time?” Answer: “Today”. It is also said, “Dig your well before you become thirsty.” If you haven’t bought gold and silver – start buying now. Seriously! If you have already bought, continue to add to your positions as you are able.
All Things Considered – John’s Commentary
We have not even seen the TIP OF THE ICEBERG for the demand that will come in Gold and Silver as a safe haven. One of the things that make great investors great is simply their understanding of which assets to own at the right time.
Action to take now: First, the most important thing is to start to buy. Just start! Start somewhere – big or small, it doesn’t matter. Krugerrands are presently more expensive than Maple Leafs, which is very strange. On the other hand, Krugerrands are the most widely traded coin in the world, including Europe. Demand has really increased, and if customers here in the US want Krugerrands today, they would have to wait for delivery.
What to buy: The market is going through a stage of volatility, so it is best to call as “best buys” change from day to day. As always, we emphasize low premium.
Quote of the day: “In the long run, the gold price has to go up in relation to paper money. There is no other way. To what price, that depends on the scale of the inflation – and we know that inflation will continue.” – Nicholas L. Deak
