Gold: like watching a ping pong match
Watching the price action for gold go above $2000 and crash below, go above again and crash below can make you nauseous or at the very least give you neck cramps. I want to encourage you not to watch the price action so closely. If you do, you find yourself in a place where you’re unable to take action to either buy or sell much like a deer gets frozen by the headlights on a road in the Minnesota winter.
You have to ask yourself if you own gold primarily for price appreciation, or for the myriad of other reasons that are equally as good if not far better than price alone.
Don’t forget:
1. Gold is private.
Name another asset that doesn’t require you to cite your tax identification number.
2. It has no counterparties.
Gold doesn’t owe anybody anything. All Fiat currency, including the dollar, are dependent on the issuing government. Stocks are dependent on the underlying company. Bonds are dependent upon the performance of the debtor. Every other asset basically has some sort of a counter party that has to perform.
3. It is tangible.
It’s not paper, it’s not digital. You could hold it in your hands and for 4,000 years people have known that when they hold gold in their hands they’ve got something of real value.
4. It is transportable.
You can take it fundamentally anywhere, anytime.
5. It is universally accepted.
People in every nation on Earth buy sell and trade gold. Some countries to a far greater degree than the United States.
6. It is infinitely divisible.
It can be subdivided into grams or portions of a gram to sizes as large as 400 trillion ounces.
8. Gold is immutable.
It can’t be changed and it cannot be artificially created.
7. It is is a hedge.
Foreign governments around the world own gold as a hedge against their own currencies and most especially the US dollar.
9. It is a store of value.
Gold today will buy the equivalent of the same men’s suit the same family car and the same family home that it did 90 years ago.
10. Gold makes a great pillow.
When you have gold, you inherently sleep better at night.
In conclusion, gold is not about the price and the appreciation or short-term decline in values that we’ve seen recently. Gold is about having a prudent percentage allocation of your net worth in tangible precious metals.
