All That Glitters...

This is the twelfth post in a series entitled Currency, Money and the Economy.

Going back to our original question in the ninth post: Is there any hope for the individual investor? The question is now simple to answer. Yes, if you protect the value of your portfolio with precious metals. If you had $100,000 in the stock market in 2000 and just did the buy and hold, you would still have $100,000 today. However, if you had put that $100,000 into gold, you would have $350,000 today.

The pundits on Wall Street and at the Federal Reserve will dismiss these facts with a wave of their hand and tell you that investing in precious metals is speculative and should only be used as a mild hedge against inflation. They will continue to stress not to panic and to stick with the tried and true method of buy and hold. However, if the last few posts should tell you anything, is that every investment has a cycle with historical patterns, and that the next positive precious metal cycle has already begun. And based on the amount of debt the United States has accumulated, it may be the last cycle.

How much of your portfolio you should allocate to precious metals depends on your needs, but diversification of your assets should include gold and silver. Just remember, the Dow/gold ratio right now is 10 and falling. Most value is gained before the superbubble is formed. If you wait until the Dow/gold ratio drops to 3 or 4, it will be too late to take advantage of the situation. By then, everybody will be scrambling and the price will be too high (historical playbook, step 7). And like the last two superbubbles we have seen in the last decade, the later one gets into the bubble, the more likely one will take the most loss when it goes bust.