There’s
a subset of investors who see the big picture for gold, believe in the
fundamental case, and have the means to buy, but are holding off because they
think gold is headed lower. By waiting, they believe they’ll get a better
price.
With
all due respect to those of you in that camp, I think that’s a mistake.
If one
is convinced gold will be cheaper a week or a month from now, it might seem
prudent to wait to buy. But obviously no one knows if gold is headed lower or
if it’s already bottomed. So don’t kid yourself: you may or may not get a better price.
And
premiums don’t stay the same. The US Mint raised the price it charges
authorized silver purchasers by a substantial 50¢ after that metal’s last big
retreat. The price retail silver buyers received was not as attractive as
they thought it would be.
But
these issues miss the bigger point. Here’s what I think is perhaps a better
way to view the subject, along with a solid strategy to handle the dilemma…
Gold Is Not an Investment—It’s Insurance
“A
dollar is worth only 70¢ now,” my dad once told me as we worked in the back
yard. “And they say it’ll only be worth 50¢ in a few years.”
It was
the mid-1970s. I was helping my dad build a dirt road to our barn, and he
wasn’t happy. Not about the hard work or humidity, but from what was
happening to the dollar. Inflation was starting to kick into high gear,
grabbing headlines that even a girl-chasing teenager could understand.
I
remember being appalled by the thought of going to the store and having the
clerk demand $1.30 for an item marked $1. Knowing what I know now, my
thinking wasn’t that far off.
Our
local paper ran a story of a blue-collar worker who had stuffed wads of
dollars into the back of his gun cabinet early in his working life. The money
was discovered by the family after his death. While saving money is good, the
duck-hunter equivalent of “Family Mattress Bank & Trust” won’t keep your
money from depreciating; the stash of $10s and $20s had lost over half its
purchasing power since he’d hidden it some 30 years earlier.
About
the same time the gun locker was being lined with legal tender, both of my
grandfathers—unbeknownst to me at the time—bought some gold and silver coins
for me and likewise stored them away. I inherited them a few years ago—and the purchasing power of the coins is still the same as it was 30 years ago, despite the price
fluctuations along the way.
If gold
were an investment, it might be prudent to see if you can get a better price.
But it’s not. It’s lifestyle insurance. It’s an alternate currency that will
withstand the inevitable fallout of government excess, the start of which
grows closer by the day. It is purchasing-power protection—protection that
you and I may use sooner than we’d like.
You
might argue that you always try to get the best price when you buy auto
insurance and life insurance. That’s true—but the difference is that you shop
among different brokers for the best price; you don’t put off the decision
because you read somewhere the insurance industry might lower its rates at some
point in the future.
So,
what to do?
Don’t “Buy” Gold—Accumulate It
Neither
you nor I nor anyone else knows exactly when the very best price for gold
will occur. Since gold is an increasingly critical form of insurance in
today’s world, the thing to do is to take a portion of your dollars earmarked
for gold and buy some now at the current low, but keep some powder dry for
the next potential dip. That way you’ve got a good price in case the bottom
is in, but you still have some cash available if the price falls lower. Then
buy another tranche next week or next month or quarter—whatever suits your
cash flow and financial plan—but make it a regular occurrence until you have
the full allotment you want.
I
cringe when I hear people say they’re waiting for a better price. What if the
market takes off higher or simply stops falling—then what?
Don’t
look to buy all at once. Buy in tranches. It’s how large investors,
institutions, and central banks (and Casey Research editors) buy.
If you
haven’t already, start your accumulation plan today. In a short period,
you’ll have a nice stash of hard assets purchased via dollar cost
averaging—i.e., at the best cost basis you could hope to achieve.
An easy
way to start that process is with tomorrow’s BIG GOLD. Because prices have fallen so
far, I asked our top four recommended bullion dealers for their best deals on
the top bullion products. We have discounts on seven different gold and silver coins
and bars. It’s a blockbuster issue with prices you won’t find elsewhere,
making it very easy to accumulate.
Whatever
you do, start now. And keep accumulating.
