’Hey Don, will gold be lower tomorrow?” Who knows? A lot of people seem to think they do, and this is really a sad state of affairs. Stock brokers are widely known to predict prices to make a sale. “Better buy today Mabel, as this stock will shoot up tomorrow,” might be typical of a stock broker of the ’used car salesman’ type. Real estate gals who drive Cadillac convertibles, tend to be pushy too, and especially if they are bleach blonde. We’ve all seen them, and hopefully have not come under their spell. Predicting what will happen tomorrow, is common in “boiler room” operations. You know, these guys are all sitting in little cubicles, wearing out the phones, driving everyone nuts, and using the spiel that things will always be higher tomorrow. Or is it lower? If I knew what the price of anything would be tomorrow, I’d be the richest guy in the world, because I’d either short or go long, and really clean up. Can anyone really predict the future?
Then there are the chart drawers and interpreters, who think they can predict. Precious metals stock charts, and stock market charts are voluminous. There must be a software that allows a person to create charts. Maybe all you have to do is feed in the figures and out comes a chart. I have tried over and over again to read the most complex of them, and have given up. There’s the “head and shoulders” and a dozen others, which portend to predict the future, based on the past, which is all any chart can do. No, I’m not knocking them. I just can’t depend on them, and in many cases, even understand them. I’m just not a technocrat I suspect. My favorite chartist and predictor is Richard Russell, whom I have been reading for close to 30 years. His charts and predictions, seem to come closest to reality, but even he can be wrong I guess, although if I were to obey anyone’s advice, it’d be Russell’s.
Last year, one of the most revered and respected of all predictors, just knew that gold would be $480 at a certain date, and his newsletters even had a count down, till that magic figure was to be reached. It hasn’t yet, a year later, but he’s a grand fellow who knows precious metals stocks like no one else. The old adage is to “buy low and sell high,” and no one can quarrel with that advice. Except, when is the low and when is the high? A few years ago, we told everyone to get out of the stock market, because its P/E ratios were out of sight, and there were no dividends or even profits. People were riding the thing up, and no one either knew when to bail, or they thought it would go on forever. Charts predicted both. Practically everyone with a grain of sense, is predicting a huge real estate come-down, if not an actual crash. Where is the top of any market?
A client of mine has been a highly successful builder in one of America’s richest communities, and he has made a big bundle of greenbacks. He just sold it all, and even his personal mansion, because he thinks it is at the top, and he wants out, and in gold, before it goes. My son did the same thing in Orange County California, and made a lot of money on his home by selling it. It wasn’t the top, and had he kept it, he might be a couple of hundred thousand bucks richer, but he was glad to get out anyway. Can the housing market crash or continual increase be predicted? Were I to predict it, I would say that small town America real estate may eventually go down, but not nearly as fast or as quickly as big city properties. In my town, a medium priced home, is just about a tenth the price as it would be in Orange County, or other high priced counties in California. Is it logical to predict that the most outrageously priced homes will go first? Has it already started? I think so, but I am not going to predict.
Can I predict where gold and silver will be a year from now? I really think they will be higher, and am betting on it, by staying out of dollars, and into gold and silver. Can I predict that silver will outshine gold? Yes, because of the historic ratios, but all predictions leave out certain disruptions, such as natural phenomena, unforeseen bankruptcies, and governmental actions. Suppose that tomorrow a huge earthquake occurred off the Pacific coast, and a tsunami wreaked huge damage on a major California city? Suppose terrorists attempted to do in Washington DC, and were partially successful? Suppose, suppose, suppose, is the trouble with predictions and charts. When really catastrophic events occur, people will seek safety and shelter. What better refuge is there than gold? When the terrorists bombed the Brits a couple of weeks ago, I thought gold would spike up, and the stock market would take a tumble. Exactly the opposite occurred. This morning, a minor, similar event occurred in London, and the stocks and metals remained virtually the same. Why? I haven’t the foggiest, but if I had bet on it with futures or other forms of gambling, I would have lost heavily. I didn’t bet, but as usual, regularly increased my holdings in silver and gold. No prediction makes me get carried away, no matter who makes it.
People always buy a lot of metals when there is a price dip, and who can blame them? It makes sense, but maybe, eventually, the looked for price dip won’t happen. The predictors say that the “big one” will hit California pretty soon, and that it is long overdue. No one has yet been able to predict earthquakes successfully, so there is no mass movement away from California. I believe that long term predictions are valid. I predict that the dollar will continue to drop in purchasing power, and the result is that all prices will go up in dollars. This is an easy prediction, because in history, no paper currency has ever not gone to zero, and the buck has already lost about 98% of its value. Predicting a final end isn’t problematical.
The trouble with predictions, is that usually they are wrong at least short term. Long term ones are more accurate, and are generally based upon logic. Short term ones, are based on virtually nothing more than charts, “hunches,” or shallow knowledge. Could I have predicted that silver would have gone from $8.30 to $5.87? Not on your life! If I knew that would happen, I would have sold all I have, and bought back a lot more for the same dollars. Did anyone predict it would happen? Maybe a few, but far more thought that silver would go to the heavens. It didn’t, and is slowly recovering. Did my builder friend close up shop, and sell out before the real estate peak in his luxury community? He doesn’t think so, and predicted that he got out at just the right time.
If you don’t need the dollars, don’t sell gold and silver, predicting a dip, because you will be frustrated if you do. People shouldn’t buy gold and silver as a short-term gamble. Please don’t do it! If you are a customer of a firm that has the guys in cubicles, who call everyone with great predictions, don’t fall for it and sell, because this character says it will go down, and you can buy lower. Nuts to these “used car salesmen.” I wouldn’t call anyone if my life depended on it, and I think that those who do, and who sit in those cubicles, should find something else to do to make a living. If you can’t make a living without calling and pestering people, get another job.
I’m in business to help people protect themselves against the ultimate currency debasement, which long term, I am not afraid to predict. As Sherlock Holmes said, “Elementary, my dear Watson.” Predictions based long term, on history repeating itself over and over again, are indeed “elementary.” Long term predictions of continual currency debasement, is elementary. Think about it. Government is out of control, and has created millions of worthless welfare recipients, who can and do vote, and who also continually demand more freebies from government. Government must provide them, or risk being voted out of office, or see major cities destroyed by riots. Government takes in a lot less than it spends, and makes up the difference by printing more dollars to pay its bills. The more it prints, the less they are worth, and no one has yet found a way to either decrease spending, or increase tax revenues. So, the deficits will go even higher than the current $47 TRILLION the government has committed itself to over the years, and it hasn’t a solution, other than more and more printing, which it will do.
I therefore hereby predict: Gold and silver will go higher, with no upper limits on dollar or euro prices. Dollars as well as euros will be continually printed, and continually lose purchasing power. While gold and silver go up in prices, they are still the same gold and silver, which pay no interest. They don’t have to! They are a refuge from the printing press, which is all I think they should be, and will continue to be. Short term? I haven’t the slightest notion. Long term? You can’t go wrong.