8 Reasons We Buy Physical Gold
The super powers in the West are doing what they can to provoke Russia and indirectly China and Iran into a world war. Most people alive today were not adults when WWII started and therefore did not follow the lead up to the war. But today the whole world can watch how the West has chosen to attack a country which has no major significance geopolitically and does not threaten any other country. Still the West clearly knows that bombing of Syria can start a global conflict with potentially horrendous consequences.
There is no intelligent reporting of these events in the Western media. Whatever propaganda the media is fed, they just publish it without any analysis or investigation. And the US with its allies do not wait for any independent verification of alleged use of chemical weapons. That a world war could start on such fickle reasoning is absolutely frightening.
UK & US STARTS A WAR TO DIVERT ATTENTION FROM DOMESTIC WOES
Syria is of course only an excuse. As a country it would be of no consequence for the safety of the rest of the world if it was left alone. Most wars are started by nations which are under economic pressure domestically. The US and UK fit that picture perfectly.
With debts growing exponentially and massive budget and trade deficits, both these countries are on the way to bankruptcy. Added to that, their leaders are under major pressure at home. Trump has “Deep State” and impeachment pressures and Theresa May suffers from weak leadership in a minority government with an unresolved Brexit. This is the perfect background for pretending that there is a major global conflict and diverting the attention to the international scene.
It is only Russia’s restraint which has so far stopped this conflict from turning into something very serious for the world. We must remember that Russia only has two military bases outside of their country whilst the US has around 1,000. Also, according to independent experts, Russia’s military might is far superior to that of the US. But in the case of a nuclear war, both countries have more than enough power to destroy the world. So we must hope and pray that it won’t come to that.
PROTECT AGAINST FINANCIAL RISKS
Virtually nobody can protect against a global nuclear conflict. But we can protect against local conflicts and we can protect against a financial crisis. In 2001 we decided as a company that protection against a potential financial crisis was an absolute necessity. Thus we took the decision to invest in physical gold for our clients and ourselves. At the time, I regarded the continuous deficit spending, credit growth and the derivative time bomb as major risks.
The best time to make a strategic and long-term investment decision is when the asset you intend to buy is unloved and undervalued. That was certainly the case with gold at the time. Gold had been going down for 19 years from $850 in 1980 to a low of $250 in 1999. Central banks around the world had been selling a major part of their gold. The UK and Switzerland comes to mind as two countries selling the majority of their gold around the lows – a very good buying signal.
As we were forecasting a potential financial crisis at some point in the future, we recommended, in early 2002 to our investors to buy gold for up to 50% of their financial assets. Gold was then $300. At the time this was quite a radical proposition, especially since gold was then a barbarous relic that was totally out of fashion. The advantage with buying an undervalued asset that is not on the front pages, is that the risk is so much smaller than when the trade becomes crowded.
GOLD READY FOR THE NEXT STRONG MOVE UP
The timing was quite fortunate. As the chart below shows, gold rose every year from $300 in 2002 to $1,920 in 2011. In 2013 a bigger correction started which ended in 2015. Since then gold has only moved up slowly just like it did in 1999-2001.
In my opinion, gold is now in the process of breaking out from the 5 year consolidation. We need to get proper confirmation with a move to $1,400 but the position of the quarterly chart confirmed by the rising MACD indicator is a strong sign that the next move in gold to new highs is imminent.
The chart below also shows that gold is in a strong uptrend and that the correction in the last 5 years is minor and finishing.
PHYSICAL GOLD IS HELD FOR WEALTH PRESERVATION NOT FOR SPECULATION
We must remember that gold is not bought or held as a conventional investment for capital appreciation purposes. No, gold has a much more important function than that. Our company invested in gold in 2002 because we identified the risks in the financial system as very high. But today the risks are substantially higher and the reason for buying physical gold even more compelling.
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