2) Has your portfolio averaged gains of 720% since 2001?
3) The answer is that investing is ALWAYS ABOUT VALUE!
1) Yet, VALUE is different things in different parts of the long-term cycle.
2) This is because VALUE IS “SEEN” IN DIFFERENT ASSET CLASSES at different points in the cycle depending on how money printing and interest rates affect different parts of the economy.
3) We are currently in the portion of the long-term cycle where money is being aggressively printed to devalue the Dollar. Here, GOLD AND SILVER ARE THE KINGS OF VALUE because long-term they have a relatively constant value so their price rises aggressively as the Dollar is devalued.
4) The dollar has already been devalued over 60% so it is like every Dollar Bill in your pocket been more than cut in half. Every Dollar in your savings account has been more than cut in half in terms of what you can buy with it. Other investments that you own that do not have “intrinsic value” like Gold and Silver have been severely cut in value as the Dollar has been devalued, even if their price has not fallen. That includes your general stocks, your Bonds, the value of your life insurance policy, and any fixed income that you have. They are all devalued along with the Dollar they are denominated in.
I have partially addressed how price and value diverge during aggressive Dollar Printing in 2 articles I have already written on Munknee.com, linked below.
PRICE VERSUS VALUE
The bottom line is that Gold and Silver have been seen as having high levels of intrinsic value by man for thousands of years. Commodities also have a high, but lessor intrinsic level of value, as “needs for man.” There is a gradient of value at any point in the economic cycle. Eventually, once the economy recovers, the general stocks like the Dow Stocks will rise aggressively in value and price as earnings and dividends rebound as they did from 1930 to the 1970’s; and as they did from the 1970’s to the year 2000. In both cases the Dow Stocks rose by 10 times their price, or more. Once this part of the economic cycle is over, we would expect the Dow Stocks to rise 10x, again, or more if enough Dollars are printed. (I will return then as DJIA-Runner) That might mean that the DJIA will rise to around 140,000 over the next approximate 15 years in lower valued Dollars. Yet, for the next few years Gold and Silver will continue to be King while Dollar printing is ramped up even more aggressively to devalue the massive debts and to balance the US Budget based on how much Gold the US holds, and how much higher Gold will go in lower valued Dollars.
Periodically through history the prices of Gold and the DJIA meet in about a 1:1 ratio. With aggressive Dollar printing the price of the Dow will likely go lower over the next couple of years, but will remain fairly high in cheaper Dollars. My work suggests that Gold and the DJIA will likely meet on a 1:1 ratio in a range of 10,000 to 12,000. If so, that would mean approximately another 600% rise in Gold while the DJIA stays flat, or falls about 10%. Anybody who thinks the Dow is “going to crash” while Dollars are aggressively printed does not understand simple math. In fact, the Dow has already crashed by 80+ percent, but it was a “Silent Crash” in terms of VALUE- not PRICE.
At the recent low area for Gold, the Central Banks of the World were huge buyers. These are the same guys who are aggressively printing paper money, and they know the printing will force the price of Gold much higher. In fact, they are depending on exactly that to devalue the huge government debts and to force Gold higher to balance the government budgets. They were buying Gold as “insiders”, knowing they will be forcing the price of Gold higher, eh?
VALUE- At this point in the cycle Gold creams practically everything in terms of value so it rises aggressively in price as investors “chase it.” The same is true for Silver. The Gold and Silver Stocks are just now entering the point where they gain huge leverage to the price of Gold and of Silver which will increase their earnings, BUT it will be the huge increases in Gold and Silver RESERVE VALUATIONS in the ground as Gold and Silver go parabolic that will really jettison the Gold and Silver Stocks, higher. That is exactly how it was from this point forward in the late 70’s. Has anything changed in terms of Dollar Printing? I don’t think so!
OTHER GOLDRUNNER ARTICLES THAT YOU WON’T WANT TO MISS!
SUPER FRACTAL GOLD- 45 DEGREE RISE
BIG PICTURE GOLD- PART 1- THE ONLY GOLD CHART THE LT INVESTOR NEEDS
BIG PICTURE GOLD- PART II- GOLD BULL PARABOLIC GROWTH
BIG PICTURE GOLD PART III- GOLD BULL LOG CHANNEL
BIG PICTURE GOLD- PART IV- SUPERBULL GOLD RIDES THE WAVES OF THE MOVING AVERAGE ENVELOPE
BIG PICTURE GOLD PART V- SUPERBULL GOLD CUP FORMATION
A much more extensive writing on Gold and Gold charts, where Gold might be going, and when; is linked, below, to Jim Sinclair’s site. You will have to scroll about half way down the page, but the article is there in its entirety.
As we go further in this series on “Big Picture Gold”, we will eventually merge our thoughts with those currently being added in my series on “Price Versus Value” in the series on “Dow Stock Crash.” I’ll post the links to Part I and Part II, below, so that you can start to become familiar with the concepts of “price versus value.”
My article on THE SILVER ROCKET is linked, below
The Gold version.
And finally, if you need a break from all of the negativity, you might want to take time out to read the following story to a younger loved one in the family.
Goldrunner maintains a subscription site that covers Gold, Silver, and the Gold and Silver Stocks that can be found at GOLDRUNNERFRACTALANALYSIS.COM
Goldrunner is also starting a new and free public newsletter that will review some of the fractal work and be delivered via e-mail, called “Goldrunner’s Fractal Corner.” If you would like to receive this newsletter, you can send an e-mail to Goldrunner at [email protected]
For the moment,
Please understand that the above is just the opinion of a small fish in a large sea. None of the above is intended as investment advice, but merely an opinion of the potential of what might be. Simply put: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Comments within the text should not be construed as specific recommendations to buy or sell securities. Individuals should consult with their broker and personal financial advisors before engaging in any trading activities. Do your own due diligence regarding personal investment decisions. In the interest of full disclosure, GOLDRUNNER is personally invested in the Precious Metals sector including various Precious Metals and other individual stocks. GOLDRUNNER reserves the right to modify or eliminate any or all positions at any point in time.