Gold, the “Pet Rock”

-- “If the Fed maintains its kamikaze tight money mantra in the middle of a deflationary currency war,” Jim Rickards wrote this week in the Daily Reckoning,“then gold and other commodities could go a bit lower.

“My expectation is the Fed will wake up to the damage done and reverse course; possibly even launching QE4 in 2016.

“As this plays out over the next few months, look for commodity and currency markets to hear the message that the Fed will achieve inflation ‘whatever it takes.’

“Once that message sinks in,” says Jim, “gold will once again shine.”

-- Gold. Gold. Gold. Everybody forgot about sleep. Now it’s gold.

It rambles on in our thoughts.

Will gold, to paraphrase Jason Zweig, continue to sit there like a “pet rock”?

The pages of WSJ inquire as much.

Rather, will it slide further, as CNBC recently suggested, to $800? Or will gold glitter again in the near future? In one year? In five years?

We can speculate. But truth be told, we don’t know.

As with every investment, there’s risk when investing in gold. And there’s always going to be risk.

… Or is there?

-- What if I told you there’s a simple way you can invest in gold, silver, and copper — with ZERO downside risk?

None. Zilch. Nada.

Skeptical? Don’t blame you.

If given the legitimate opportunity, though, would you take it?

Whatever your answer, stay tuned.

Byron King, editor of Outstanding Investments and Military-Tech Alert is jumping in today to rap about what’s really up with gold…

And show you how… if you so choose… to invest in precious metals with no downside risk.

Take it away, Byron!

What’s Happening out in the World?

Check Gold

By Byron King

Some people begin their day with a cup of coffee. I begin mine by checking the price of gold and silver. Everyone needs their own special jolt, I suppose. Mine is precious metals.

I can tell a lot about what’s going on the world just by looking at the gold/silver price quote.

Turmoil and war? It often favors gold. Investors seeking safety? They buy gold.

The rise of the East? Gold. The “rest of the world” getting tired of U.S. hegemony and dollar power? Gold. Inflation? Gold. Too much “cheap” money? Gold.

It works the other way, too. World getting calmer? People sell gold. Stronger dollar? Sell gold. Rising interest rates and, thus, carrying costs? Sell gold. The “inevitable rise of the East” hits a speed bump, such as the current ongoing China market crash? Sell gold.

Speaking of market crashes, consider what played out in 2008–09, during that crash (see chart below). Many holders sold gold and raised cash for the short term. In other words, when the wave hit, people sold what they had to sell. They sold things for which there was a market, and there’s always a market for gold. As opposed to, say, people who couldn’t sell what they might have wanted to sell but couldn’t, meaning assets for which the going rate was “no bid.”

The Golden Roller Coaster

I began checking daily gold/silver quotes in 1999, during the dot-com boom. That is, I watched the share prices for go-go tech plays soar into the ether.

I couldn’t figure out why the market was falling so head over heels in love with small — often startup — firms with nonexistent metrics on basics such as sales, earnings, growth, etc.

Yet the same market was disdainful of “real” things, like scarce metal that takes lots of hard work to extract from the ground.

Don’t get me wrong. I like “tech,” to be sure. I worked around all manner of super-duper tech when I was in the Navy. Still, back then, it struck me that dot-com valuations were getting insane, certainly as compared with other things that anchored the world.

For example, I remember buying Cisco at $16 per share and watching it move to $80. I had lunch with a colleague one day and talked about it. “What does Cisco make?” he asked. “Either routers for computers,” I replied, “or perhaps they have a cure for cancer.”

We both shook our heads.

And then there was gold. Look at the chart below for the past 15 years…

Gold's 15-year rollercoaster

As you can see, it was a great decade for gold from 2001–2011 or so. Nice, steady rise for the most part. Even the 2008–09 market crash looks like just a blip, when the gold price dropped from near $1,000 to the “support” level of $700. Of course, at the time, the movement was a 30% loss. Still, for long-term holders, it was just a bounce on the road.

We lived with a plateau, of sorts, in 2011–12, and the price has declined ever since. The chart shows the fall off a cliff, so to speak, and then a downward bounce for about two years to the current $1,100 level.

Now what? Where’s the price of gold headed? Will it bounce from here? Tumble from here? Go up? Down? Sideways? Could gold prices drop to the $1,000 support level? Or even to $700? Nobody really knows. We just have to live through it.

One big issue troubles me, I have to say. That is, there’s little good news out of China, where demand for physical gold is down 9% so far this year.

Worldwide demand for gold — bars and coins — is down 17% this year. Despite spikes in buying as the yellow metal settles on lower and lower price points. Where are the big-time buyers, one wonders?

Sentiments are such that cash is king just now.

Buy Gold, Protect the Downside

So cash wears the crown, but what if you could buy gold and still have the prospect of raking in the upside gains while protecting against the downside?

Seems pretty good, but is it too good to be true?

Ordinarily, I’d be wary of a promise about protecting the down-side on gold. Except this promise comes from our old friends at EverBank, which is offering a 5-year indexed certificate of deposit (CD), called the Power Metals MarketSafe® CD, that is tied to the annual performance of three precious metals — gold, silver, and copper.

As with all of EverBank’s MarketSafe CDs, with this Power Metals CD your deposited principal is protected, and backed by the usual FDIC insurance guarantees. Thus at CD maturity, you’ll recover all of your initial deposit, even if the gold markets tumble further.

But if gold, silver, and copper perform well? Then you’ll earn a market “upside” payment on top of your principal at CD maturity. That “upside payment” is based on the performance of the metals across the annual pricing dates (capped at 45%). Please note: No annual percentage yield or periodic rate of interest is paid on the CD.

Click here to get started today.

And enjoy checking the price of gold and silver in the morning, with or without your cup of coffee.

[Important note: Laissez Faire has a marketing relationship with EverBank and may receive compensation. But rest assure, we wouldn’t be passing along the information on this MarketSafe Metals product if we didn’t fully believe in it. Click here to get started!]

Until tomorrow,

Chris Campbell

Chris Campbell

Written By Chris Campbell

Chris Campbell is the Managing editor of Laissez Faire Today. Before joining Agora Financial, he was a researcher and contributor to SilverDoctors.com.