Reasons to Invest
Investment requirements are different to different investors. In gold there are three types of investors.
- The first type is one who invests for profit. His aim is to buy low and sell high. He usually uses the technical picture [charts] and other such tools to guide him to do this well. He will use as his measuring rod, currencies. So to buy for $100 and sell for $200 would mean to make a 100% profit. The assumption is that the dollar’s value will remain constant. Whereas, the reality is that when one buys gold, one sells the dollar and when one sells gold one buys the dollar [Remember that the writer of the dollar note stated that he trusts in God – which God?]. Nevertheless, since the last War the dollar, equities and the plethora of different investment instruments available to the U.S. investor have served the purpose of building up a store of wealth that can take care of him in his old age or be left to his heirs. The mindset of the developed world investor is to use his education and investment skills to build up profits to create his wealth. But more than that, he uses and trusts financial institutions to support his quest for wealth all the way.
- The second type of investor has the same eventual aim of creating wealth for his old age or to leave to his heirs. However the path to that wealth is not through the use of profits to create more, but primarily through his own separate endeavors taking profits from those endeavors and placing them in a safe place such as property or gold, two items that represent a store of wealth that is not associated with profits, but simply a recognized store of wealth that will retain its value through his life. More than that he puts his wealth out of the reach of financial institutions and his government.
- The third type of investor is government. He is completely different today, in that he wants it to sit in his reserves on a permanent basis, with no profit in mind at all. He holds it for the best reason and that is to keep him going on the dark rainy days, when his own currency just won’t do the job it should and to counter the swings in his other currency holdings. He wants a measure of stability in his reserves and gold helps him to get that. Apart from a 40 year courtship without gold at center stage gold has always been internationally respected and valued money. It is still, as the central banks now confirm, through the cessation of their gold sales and by those who are persistently buying irrespective of the price. It is the central banks alone that will ensure that the gold price will continue to rise, because it is not about gold itself, but about gold as money trusted by people and governments.
The profiteer may well find the second investor’s approach too simple, until he looks back over the last ten years and measures the growth of the value of gold against that of equities. The second type of investor usually comes from the world east of Europe, where corruption, changes of government and turmoil have left a people with little trust in institutions and a great deal of self-sufficiency. Until a few years ago the west could trumpet that their institutions were part and parcel of wealth creation. That is changing now. While the east has far less institutional cohesion as a result of their past, they have never lost their belief that gold is the real money. The west is headed back that way now. And the central banks are now either holders or buyers, not sellers. Why?
Why Gold?
Gold is money when nothing else can be trusted or relied on. It retains it value when enemies exchange it. It is an international asset. A man from China will value it as much as a man from South Africa or Canada. Its price is set in London and used in the far reaches of the earth. There are no unfulfilled obligations attached to it. It is free from all national restraints that come with paper cash. Today, most importantly is reflects no national economic fundamentals and is not under the control of any individual or group of nations. It is free of government!
Nothing else fits that bill, nor will it. As we watch the gold price move like a flowing tide subject to the ebbing and flowing waves of price movements we are intrigued that there are still so many commentators that believe it is a metal in a bull market that will inevitably be followed by a bear market. We do not subscribe to that opinion. We feel that mankind as such is moving back to a period of time marked by uncertainty, instability and a tremendous shift in world power, when debt obligations issued by individual governments, called currencies will have a relative value. Gold on the other hand will reach the point where it will be an arbiter of value. Even the head of the World Bank has suggested that role. Despite the restraint it puts on all governments, the pressure we see ahead for the world will ensure that more and more people will come to consider gold as real money.
How will it fit into the Monetary System in the Future?
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This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Gold Forecaster - Global Watch / Julian D. W. Phillips / Peter Spina, have based this document on information obtained from sources it believes to be reliable but which it has not independently verified; Gold Forecaster - Global Watch / Julian D. W. Phillips / Peter Spina make no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Gold Forecaster - Global Watch / Julian D. W. Phillips / Peter Spina only and are subject to change without notice. Gold Forecaster - Global Watch / Julian D. W. Phillips / Peter Spina assume no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, we assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information, provided within this Report.
