Tuesday, September 27, 2011
When markets de-lever there's no logic to market movements over the short run. Correlations break down. And the short run can last for several months.
Everything gets sold as funds try to stay liquid. Hedge funds blow up. Traders get squeezed on both the long and short side as market movements become terribly volatile.
The only thing you can do is to know why you're holding what you're holding. And then hold on tight.
If you don't understand WHY, you'll lose your positions. You need conviction or you'll go broke.
This is why bullion is so important. If you can just get your head around how bullion protects you during periods of monetary instability and get yourself to buy some, you're most of the way home. Because you'll never impulse sell your bullion. It's just too damned inconvenient. To sell your bullion you really have to think it through and go to all the trouble of following through. And that effort will save you from making stupid emotional impulse moves that destroy your portfolio.
Of course, if you just don't get why it's so important to own gold during periods of monetary instability you'll never go to the trouble of buying bullion.
So study up. Think it through. And if you haven't bought yet this is a great opportunity. And if you have bought, buy a little more right here. Sure, it could go lower. In the short run it could easily drop another hundred, two hundred bucks.
In the long run it will be much much higher. You have to be able to see that for yourself. If not, good luck. Because when banks go broke everybody suffers. And in the end everybody panics out of paper and into tangibles.
Everybody ends up chasing the one tangible currency: gold.