Pop Goes The Gold Bubble?

I always get a kick out of these articles that young writers put out when they try and tackle a subject such as gold and claim it’s in a “bubble.” To date, I have not seen one of them address the banking system mess our country is in (as well as the banks of Europe and soon most everywhere else).

Another Negative Article On Gold

I replied to a recent article I found on Seeking Alpha, a financial website I write for now and then. This is the writers first article published on Seeking Alpha and it was called “Pop Goes The Gold Bubble.” (scroll down on that link to the comments section after reading the article to see my reply and any potential debate should it be forthcoming). The reason I replied to the person who wrote the article, who is not a financial advisor at all but someone who claims they made money on the internet and now just spends time traveling, is because this individual actually replied to those who commented on his gold hit piece. Most gold bubble article writers don’t bother to defend their position in their articles (probably because they know they can’t). This person actually seemed to be open and willing to learn something that he may not know. I’ve been challenging the logic of these gold bubble writers for years as you can read those replies by clicking on the CNBC video link I mentioned in my reply.

Just the Facts Please

What I wanted to do in replying to this writers article about gold being in a bubble was point out the facts. It is for this reason that I post my comment below for all to read as I thought it was appropos for the current gold market environment which has seen the prices fall of late. Anyone who reads my articles know that I recommend dollar cost averaging in on this pullback because the future price appreciation is assured by the simple understanding of what I write about weekly on my site which I have briefly discussed in this reply below. We are presently in the second and longest stage of the gold bull market, a stage that you’ll see the market makers try and buck people off the gold bull. The key however, as you will see, is to hold on tight and look forward to the ride of a lifetime should the prices fall further.

Reply to the author of the article “Pop Goes The Gold Bubble.”

Rich,

One thing you leave out of your analysis is the precarious situation the U.S.
banks and even the world’s banks are in today. The IMF can’t bail out all the
PIIGS in Europe, and neither can Germany/France and the private investors
(including our own Fed as they have done in the past).

In the U.S., our nations top 5 banks have over $4 trillion of sub-investment grade derivatives
coming due in the next 5 years, more than at the height of the 2008 financial
crisis, with no counterparty to them but the lender of last resort the Fed. So
much for the financial reform act eh?

Ask yourself one other question…how is it the Financial Accounting Standard Board allows banks to
cheat by not marking to market their assets? They are allowed to mark the value
of their assets (real estate) to 2006/2007 fantasy values with the hope we will
return to those values (see Japan’s deflationary years, currently in it’s 15th
with real estate prices plummeting 75%).

We are going through an overall deflationary credit contraction where illusions of wealth chase the perceived
wealth found in treasuries (why are they so strong too?) and real wealth found
in gold (and silver). There will be times when gold and silver take a breather,
but the fundamentals of debt, deficits, unsustainable government programs (size,
unions, favors to lobbyists), Federal Reserve quantitative easing and other
gimmicks to fight the deflation, bank failures (and an FDIC that is $8 billion
in the hole), pension deficits, and the list goes on will bring the Humpty
Dumpty economy to its knees.

Gold is “insurance” against such. It always
is what people run to.

I write about the banking situation continually on
my blog at http://bit.ly/buygoldblog and in Chapter 4 of my book “Buy
Gold and Silver Safely” which outlines how things have and will unfold in the
future.

I was a financial advisor who didn’t agree with what the
industry was saying and still don’t. That’s why I started my own precious metal
company and wrote the book to help people understand that for which they do not
know. The advice from most financial advisors the last 10 years sure hasn’t
helped….but gold has gone up in price every single year.

Check out  this video I did showing how CNBC has continually mocked gold as they don’t
understand its relevance: http://bit.ly/CNBCHATE…

This isn’t the 80’s. The dollar isn’t the same dollar. The world is not the same. But we are doomed to
Keynesian economic philosophy that Bernanke/Bush/Obama and insert next President
here, will adhere to and just add more debt to an already overloaded ship.

Better man the silver and gold lifeboats unless you think somehow,
someway, that our government and the Fed will do everything perfect (end all
wars, secure our borders, cut many departments, reduce government jobs that
can’t be paid for, stop corporatism, stop listening to lobbyists, reduce debt
and obey the Constitution) while at the same time fix the banking system, get
banks to loan, increase consumer confidence, reduce unemployment, pay for the
growing welfare state, health care, medicare, social security, and
maintain/improve our nations infrastructure.

And anyone who believes  that my friend is living in a dream world and has no concept of the reality we
live in today and how government’s work.

End reply

What To Do Now – Buy Gold

If you believe our government will somehow pull the rabitt out of the hat and fix all that needs fixing with our economy, then don’t buy gold. Naturally, those who understand what deep rooted problems we have in a multitude of areas will protect their exposure to currency risk by buying the only insurance that can counteract these risks; gold. If you haven’t bought any gold at all, now is the time to consider dollar cost averaging into the metal. Silver, while more volatile, is also a good option. Call and speak to a representative today and see how you can benefit from the coming run up in the price of gold and silver and how you can protect what you have worked a lifetime in acheiving. The numbers don’t lie. There is a reason why the prices of gold and silver are moving up each year.

Call 888-604-6534 today.

UPDATE 10/12/2011 – It looks like the author of this article has responded to almost every post in the last 24 hours, trying to refute what they say, but has not responded to my comment above. This is the normal type of response (none) I have received the last few years when refuting those who don’t really understand gold’s place in a properly diversified portfolio. I especially get no response from journalists, who really have no reason to be followed as experts on the precious metals industry, but one journalist from Fox Business did just quote me yesterday.

About Doug Eberhardt

Doug Eberhardt is a 28 year financial services veteran and precious metals broker selling gold and silver at 1% over wholesale cost. Doug has written a book to help investors understand how gold and silver fit into a diversified portfolio, how to buy gold and silver, and what metals to buy. The book; “Buy Gold and Silver Safely” is available by clicking here Contact phone number for Buy Gold and Silver Safely is 888-604-6534