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Why You Should Avoid Gold

Fear.

Right now, people are loading up on bullion, bullets and beans – as the expression goes. They’re doing so out of fear. And while I don’t disagree with the gesture, I think the emotional response is not the right reason for it.

The second term of Obama’s reign will be terrible as he is unchained from the need to get re-elected – or so it’s believed.

Who knows what Obama will do? I can’t say. I don’t imagine it will be any better or worse than his policies of the past four years. What I do know is that gold is likely to be higher in four years than it is today.

And today, you have a choice. Do you want to join the surge of market participants who are buying gold? Or do you want to wait until these “fearful” gold buyers aren’t crowding the market?

Now, before I go any further, you should know that I hate trying to time the market. I regularly write, telling you NOT to try and time the market.

But in this case, I think it’s a mistake to step into the gold market. I think we’ll see a substantial correction in the weeks following this surge that will present a better buying opportunity.

To be clear – we now know a few things for certain that we didn’t know last week. Mitt Romney promised to fire Ben Bernanke – and he may have even hired a more monetarily hawkish replacement.

But now we know that Bernanke isn’t going anywhere – and neither are his policies of “quantitative easing.”

We know that the budget is likely to stay well into the deficit territory.

And we know that very soon we’re going to (AGAIN) exhaust the debt ceiling.

We also have the fiscal cliff to contend with (and I urge you to sign our petition to end the fiscal cliff if you haven’t already).

These key facts point to one  increasingly inevitable outcome: the continued destruction of the dollar’s purchasing power, and eventually its reserve currency status.

The result of both of these inevitabilities will be higher costs for nearly everything that you and I buy: higher priced food, fuel, housing, clothing, insurance, interest rates and taxes.

We’ll also see commensurate increases in the price of gold. Which is why it’s vital that you do continue to buy physical gold (and silver) – but I’d wait for at least a couple weeks until the fear-trade has subsided.

I think you’ll be rewarded for your patience.

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