- Created on Monday, 20 February 2012 08:00
- Published on Monday, 20 February 2012 08:00
- Written by Sara Nunnally, Editor, Macro Trader
- Hits: 3899
With massive amounts of debt on the books, it's a perfect time to buy gold. Here's the best way to do it.
There's no doubt about it. These past four years have been trying. That's why it's important to find some perspective... Get your head away from what's been happening over the past few days, and find out what's been happening over the past few years.
Back in 2008, I was traveling the world... From Vietnam to Vienna, Chile to the Czech Republic.
I was in Austria when the Lehman Brothers' bankruptcy was announced. The bottom was dropping out, and our portfolio had the worst year in our history.
We'd bet on decoupling, and were wrong.
But it's not so much that we were wrong economically... The emerging markets and international financial hubs took hits to GDP and other growth, but not so much as the developed world -- particularly the U.S.
And the bounce back was significant.
Rather, it was a crisis of fear that dried up massive flows of investment cash that has been flooding into growing emerging markets.
Indeed, some of our worst performers in the second half of 2008 actually came out ahead of the U.S. markets as the smart money finally figured out that not all economies were going to hell in a handbasket.
Brazil, Australia, Malaysia... Playing these markets and currencies led to a lot of pain.
But look at them now compared to the S&P 500.
Brazil completely dominated 2009. We know the U.S. had a great comeback, but that's peanuts compared to the run Brazil had.
Commodities have also pulled their weight after huge drops in gold, oil, grains and copper prices.
Whatever strength we think we have in the dollar is just an illusion. This chart shows where the real strength is.
Gold and silver have vastly outperformed the stock market.
It's important to take this big-picture point of view to find out what's working and what's not.
And LAN Airlines (LFL:NYSE) out of Chile has gained 230%.
Oil prices, after plummeting down to $30.28, have clawed their way back above $100 again.
The wide-angle lens opens the door for massive trends to take shape. Long cycles, long waves. Last week Aaron and I sat down with Ian Gordon, president of the Longwave Group. He studies these cycles and analyzes what inflation looks like during bubbles, and what debt looks like during economic depressions.
We're in a time when huge amounts of debt need to be unwound -- either through default or the erosion of a currency.
(We're seeing both on either side of the pond right now.)
It's the perfect time to buy gold... no matter the price.
As Aaron told you last week, Ian recommends buying physical gold or gold mining companies with actual reserves.
ETFs are just paper.
But there's one ETF that's not just paper. In fact, owning units of this ETF gives you the right to take actual delivery of gold.
Take a look at the Sprott Physical Gold Trust ETV (PHYS:NYSE). Like the well-known GLD, this Physical Gold Trust is also backed by gold.
It's held in a secure storage location in Canada.
And actual unit holders of PHYS can redeem their units for physical gold. It's the best of both worlds, really. You can invest in the price movements of gold without having to ship and store it yourself. But if you think things are getting really dicey and you want that physical gold, you can get it.
The other value of PHYS is its price. It's selling for about $15 a unit. Compare that with GLD at nearly $170 a share and you've got a big reason to pick up PHYS.
I've got my Macro Trader readers in PHYS for the long haul.
With the value of the dollar eroding every time we issue more debt that could never be repaid with cash, gold is one of the few assets that gives you real wealth.
This long wave cycle shows the value of looking at investments in terms of years instead of days. Actual trading is important -- and lucrative -- but don't overlook these massive trends chugging along right under your nose.
Gold, silver, oil, strong appreciating international currencies, growing and stable emerging markets... These are all going to be safe havens when U.S. and European debt starts to crumble.
P.S. Gold will be a hot topic at our natural resources conference. But it won't be the only moneymaker we cover. We'll hear from speakers on just about every angle of the resource sector. If you want to get the straight scoop from the world's top investors, including the man who created the gold ETF I like the most... this is your opportunity.
Other Related Sources:
Gold Bulls Expand as Paulson Says Buy
Government spending keeps expanding our debt waistline, and gold is the best hedge against the obesity. Billionaire hedge fund managers are jumping back into gold, even at these prices. Perhaps we should, too...
Sales tax increase approved by Japan's cabinet
If you think our debt is bad, Japan's is worse... and now, they're raising taxes to help fund the cost of their debt, for things like social security. The Japanese cabinet just voted to double sales taxes by 2015. U.S. politicians take note!
January CPI: Energy Costs Rear Ugly Head
Energy and food costs are always talked about when it comes to inflation, but official figures never include them. But in January, fuel costs helped lift CPI to its fastest rate since September.