Why Gold Is A Superb Investment Strategy

 How do investors make money? It’s a simple question with a simple answer.

Buy low; sell high. The Golden Rule of investing.

In contrast, most of today’s pseudo investors are momentum-chasing gamblers. They buy high and hope to sell even higher.

This article is not for those people.

The Golden Opportunity

For real investors, wouldn’t it be nice to be able to put your money into an asset class that you know will rise dramatically over the long term?

To make things even better, what if this same asset class frequently dipped to irrational lows – regularly presenting investors with excellent buying opportunities?

Introducing gold.

Investors know that the price of gold will rise dramatically over the long term. The numbers are unequivocal.

Price of gold in 1971: $35 per ounce.

Price of gold in 2000: $275 per ounce.

Price of gold in 2020 (year high): $2070 per ounce.

What is the significance of the year 1971? That is the year that the United States “closed the gold window”.

This effectively abolished the last remnant of the gold standard. Of equal importance, the price of gold was (at least in theory) now able to float freely.

Why the price of gold ALWAYS rises over the long term

Gold has appreciated by roughly 5800% since 1971. The world’s best-performing asset class over the past half-century.

Why has the price of gold risen so dramatically? Because gold is a monetary asset.

In fact, gold is the premier monetary asset in our monetary system. Even in the absence of a formal gold standard, it is regarded by central banks themselves as a superior monetary asset to their own fiat currencies.

This is why central banks have been accumulating gold over the past decade. This is unprecedented since the end of the gold standard.

Because gold is a monetary asset, gold rises in price as central banks dilute the value of their fiat currencies through serial over-printing.

Gold rises in price versus these paper currencies because its supply is (relatively) stable. No dilution.

As serial currency-diluters, central bankers know that gold will continue rising higher and higher in price over the long term. That’s why they are dumping their own currencies to acquire gold.

When will the price of gold stop rising? When our currencies are no longer serially diluted.

When will our currencies cease to be serially diluted? When the world no longer has central banks.

Simply, as long as the world relies upon the (dubious) monetary entities known as “central banks”, the price of gold will rise relentlessly and dramatically over the longer term.

Why the price of gold frequently hits irrational lows

If gold is an asset class guaranteed to rise over the longer term, why do we see so much “volatility” with the price? More specifically, why do we frequently see sharp, irrational drops in the price of gold?

Ask Alan Greenspan.

“Central banks stand ready to lease gold in increasing quantities if the price rises.”

  • Testimony of Federal Reserve Chairman Alan Greenspan, November 1998

Imagine you’re a central banker.

Your entire career is spent destroying the fiat currencies that you “manage”, through excessive money-printing. See: Powell’s Posturing Can’t Hide Fed Deceit

Since the Federal Reserve was made the steward of the U.S. dollar in 1913, the dollar has lost more than 99% of its value through serial dilution. The vast majority of this damage has been perpetrated by the Federal Reserve since the end of the gold standard.

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Disclosure: 

 

SKRR Exploration Inc and Leviathan Gold are clients of Dynamic Wealth Research. The writer holds shares in SKRR Exploration ...

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