Gold’s Time in the Sun – And How to Cash it In Before Sunset

goldImage by Giorgio Monteforti via Flickr

The price of gold has never been higher, and as we will see below, all relevant global trends have aligned perfectly to create this opportunity. For those looking for the right market moment to sell their gold, it isn’t likely to get any better than this.

From the global currency indicators to local offers of cash for gold by Gold Buyers Melbourne, the numbers available to anyone holding gold and looking to sell are the best anyone has ever seen. For those looking for some quick cash to pay off debts, selling gold could be the ideal solution.

Let’s take a look at how this unprecedented situation was created – and why we’ll probably never see it again in our lifetimes.

  • All other potential reserve currencies are, for the moment, weakened, uncertain, or untested. The dollar – the lion of the 20th century – still shows no sign of recovering from its self-inflicted wounds of overspending on military, under collecting on taxes, off-shoring of jobs and ill-advised deregulation of its banking industry. It is haemorrhaging cash and printing more rather than stopping blood flow to the injury. Similar issues have plagued the European economy, and the European Union may break apart before it ever fixes itself – leaving the euro as a poor choice for investment at present. The pound is looking at a similarly uncertain fate. China continues to impress with its growth and stability, but its decision-makers have very limited experience on the world stage; they have yet to show that they can lead a global economy; and they work in an isolated setting unfamiliar to many of the world’s leading businessmen, with whom they don’t have a solid relationship based on overlapping values. For all of these reasons, much of the world hesitates to invest its finances in the yuan.

 

  • All other potential future reserve currencies are equally untrusted – at least for the moment. Bitcoin made giant waves recently, and showed a lot of promise at the outset, but then fluctuated wildly and hasn’t been heard from much since then … even as its virtual competitors are jockeying to be the next Bitcoin. What nobody knows for sure is whether the world’s big hitters are ready to put all their eggs in a virtual basket at all, especially as computer spying and hacking stories routinely make headlines.

All of these historical trends had to come together at the same time in order to create the conditions necessary for gold’s historic rise … but for gold to fall again, it only takes one of the above conditions to change.

If a single existing currency can prove its value and stability to the satisfaction of the world’s governments and investors, that currency will replace gold by virtue of being cheaper. And if a single future (or virtual) currency can fulfil the same role, investors will trade their gold in for that – and naturally the price of gold will fall as its availability grows.

It can’t be long before any of those conditions are met, given the extraordinary rewards for the country or group that makes it happen and therefore sees their own currency become the most desirable one in the world; and so the smart money says that it will happen soon.

And that leads us to our last piece of advice for this column. As a general rule for investing, for any trend that seems certain to occur, don’t try to bet on who will be the likely winner or loser in a hotly-contested race. Bet on who will be the certain winner or loser *regardless* of who wins the contested race.

To take an example from recent history, it couldn’t have been known whether YouTube, Hulu, Netflix or iTunes would win the video-on-demand race, but the *certain* loser was always going to be Blockbuster Video no matter which of the other companies won the race.

Similarly, no one knows for sure which currency will take over the future, but one of them surely will, and gold is bound to lose out when that happens. Our advice? Make your investments accordingly. If this ‘perfect storm’ in gold’s favour isn’t enough to inspire you to cash in, ask yourself: what would be? All storms pass eventually.

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