Too Late To Buy Gold?Take the Quiz!

With gold recently topping $1380 an ounce, some believe that's it for gold.It has made its big run up - 450% now over the last decade.As one person said to me yesterday, "you have to be nuts to buy gold now, dont you?"I've heard that a few times in the last couple weeks from people I run into and also some of the talking heads.Then, it suddenly occurred to me.Everyone I heard it from never did buy gold.

One of the TV gurus says he remembers getting burned on gold 30 years ago so he quit trading and owning gold since.He assures us gold will once again head south at first sign everything is getting better.Another business associate made a comment during a recent meeting, that it's for sure too late now to buy gold.I recall a time when gold passed $800 an ounce, this same person finally went to the Lear Capital Site and set up an email price alert.He was definitely going to buy when gold went back to $750.That was two and a half years ago.Every time I see him I ask if he got his alert yet.A couple times I suggested he raise the price on the alert but for years now I have heard, "now it's too late."

Within my circle of friends, some have heeded the warnings and bought and continue to do so.And others, when the topic arises, tell me, "it's too late, I should have listened a long time ago."The common theme amongst all who now say it's too late, is they never bought, even when gold was a fraction of what it is today.

So, as I have pondered this issue on more than one occasion, when my friend commented to me yesterday that, "you would have to be nuts to buy gold now," I asked, "why?"He quickly responded saying it was $1500 an ounce now and was not going any higher.I reminded him that's what EVERYONE was saying when it broke $500 the first time, then $600 then $800.He agreed but came back with, "it has no intrinsic value."I proceeded to ask, "how much intrinsic value does the dollar have when you can just print more any time you need more?"

Of course he smiled and agreed.He didn't ask for the web site address or for a number to call to speak with one of our specialists, but he did agree.

I totally understand why some perceive the gold price can go no higher.It is at or near all-time highs, irrespective of inflation and dollar debasement.But, let me pose this question?Which is it?A) Rising Gold makes the dollar weaker; or, B) A weaker dollar makes the gold price rise. Please choose one.

I think most people chose (B) which is the correct answer.To choose (A) and say rising gold makes the dollar weak would be like saying a thermometer makes heat.A thermometer only measures heat and so it is with Gold.Gold is an instrument used to measure the value of the dollar.Why the dollar?Because the gold price is denominated in terms of dollars which still resides as the world's reserve currency.

Once you believe in this logic, saying gold cannot go any higher is tantamount to saying the dollar can go no lower.So let's rephrase the question, "Is it too late to own Gold?"To, "Can the dollar grow weaker?"Now a Quiz:

1.Do budget deficits make the dollar weaker?
2.Does rising national debt drive down dollar value?
3.Will printing more stimulus money weaken the dollar?
4.Can trade deficits diminish dollar value?

If you answered yes to any of these question, you just explained why the gold price will move higher as it measures up against dollar value.Now look at each question and ask, "will this occur?"Answering yes to any of these makes higher gold prices all but a foregone conclusion.

Now ask yourself how long it may take to achieve a balanced budget or start paying down debt or generally to reverse course in any of the above areas.If you think you will be able to answer "No" to all of the above questions a year from now, then gold prices may stop rising at that time.If you think it will be 5 years, then gold prices may have 5 years to run.

If you believe, as some, that it's going to be at least 10 to 15 years before our current situation totally reverses, then it's easy to see why experts say the gold bull market is just beginning.

Over the last 10 years, gold prices have risen 450%.Now the quiz results are in.The next 10 years could cause gold to measure even higher returns in dollar terms.All of a sudden, gold at $5000 an ounce or even $10,000 as the Wall Street Journal just reported, doesn't seem so far fetched.
If you look at the history of fiat money than you see that fiat money has a 100% failure rate. All fiat money has failed and the dollar will fail too - it's just a matter of time.The United States has passed the point of no return and is plugging more and more bigger holes. It is not addressing the problem in any way.That's why we will see precious metals explode before they eventually collapse again under a new currency. In my opinion gold and especially silver have just started to move up. I would call it now phase II. Phase III is when regular people in mass get in.