This is a common question from people who are mulling over whether to invest in precious metals now or hold off a bit longer…

"Do you think the US will keep the Bond market going a little bit longer? We can all see the world-government banking cartel are getting ready for something big but I wonder because Obama’s reign is not over yet, they will prop this up at least until next year when his reign ends.

I am lost as to whether to invest now with various sources-talking heads and historical chart events approaching , super high stock markets, inflation talk and also now deflation ? bond markets getting nervous, there seems to be a chop of opinions and charts depending what angle to look at.

At the end of all these measures , opinions and insiders do you just go for a gut feeling and run with whos the boss and “is it time yet”, will they have Obama leave office with a crashing stock-market and bond market? I wonder if they will let that legacy happen.

I know the worlds trillions in debt but I am confused in which to understand if we are hitting the high inflation or are we going into deflation (cutting rates) I wondered if you had more of a take on this ?

Thanks and sorry if you have covered this in length before already."

M.

Here’s our answer bearing in mind we don’t offer advice, just our own thoughts and opinions. So take from them what you may, but be sure to make up your own mind!…

That is the $64,000 question alright! If we knew we’d be on the beach somewhere sipping our profits! Great question though.

Precious metals can rise without a crisis

The first point that you might not have considered is that the factors you mentioned are not necessary for precious metals to be rising. That is we don’t necessarily have to see the bond market and/or stock markets tank for gold and silver to rise.

Recall that gold rose for a close to a decade without a major crisis hitting through to 2008.

While the factors you mention might also be gold positive, we don’t believe they are a must for gold and silver to enter a renewed bull market.

Actually we posted an article on the site last week related to this topic that you might want to check out too:
History Shows A Gold Bull Market Is Fast Approaching

The trend change may have already happened in NZ Dollars

We’re starting to think the trend change may have already happened in New Zealand dollar terms. Gold has been quietly trending up for the past year without too many noticing.

It seems to us that most people have probably been scared off by now. We certainly haven’t seen a lot of buying in recent months. And those we know around the world dealing in precious metals report the same.

Inflation vs Deflation

As for the inflation versus deflation argument. If you believe Harry Dent, deflation will cause gold to fall to $700. I’m not sure I buy his argument though. You can download a free report of him versus Jeff Clark on the article mentioned above, which also gives a good inflation versus deflation argument. I think some of his points are moot because in the 30’s depression gold was still money anyway. But he seems to ignore that point in much of his “gold will fall during deflation” argument. It seems like we have been in a deflationary period over the past year but gold has held up pretty well.

Trying to second guess where the price will go and time the exact bottom is going to be near impossible. Also consider that we could see some price rises quite rapidly, just as we had a rapid fall a few years ago.

Consider the psychology of buying

Something to perhaps consider when deciding whether to buy is how would you feel if you sat on the sidelines while a sharp rise happened? Would you then be tempted to buy in at higher prices?

What is your “sleep soundly at night” comfort level?

What amount of gold and silver will have you sleeping like a baby at night?

Another good consideration to mull over is what would be your “sleep soundly at night” comfort levels. That is, buy enough so that if the price fell you wouldn’t be too worried, but also buy enough so that if the price rose you won’t be kicking yourself. Only you know what this level is, but it does takes some imagination of different amounts/situations to work it out.

Maybe keep some “powder dry”?

Similarly you might also want to buy some and “keep some powder dry”. That way if it did fall further you can buy some more at lower prices. But you also won’t be kicking yourself if it rises sharply.

Also on this topic you might want to check out this 2 minute Chris Duane video on “not being greedy”. And buying for reasons other than just price.

But that said, if you can get more ounces for your money why not?!

What might happen in the US?

As far as what might happen in the US? Who knows?

The bond bull market has been going on for over 30 years so it is certainly due for a trend change and for interest rates to rise.

You might have noticed global bond interest rates have bounced up sharply since the lows earlier this year.

But we’d say it’s too early to call that a trend change and to expect interest rates to necessarily just continue on rising steadily from here. We read recently how when the bond market and interest rates made their last major change in trend in September 1981, rates had zigzagged up and down for about 2 years before the change was confirmed.

So we could well see the same happen now. With it not being clear for some time yet where interest rates are going in the longer term.

Don’t bet on the bond market falling over

So we wouldn’t necessarily bet on the bond market falling over anytime soon.

As for the stockmarket, the US and many others are certainly overvalued and ripe for a correction at the very least. But as for whether a crash is just around the corner, who knows?

If this did happen, it could actually send more money into US bond markets and therefore actually lower bond interest rates further.

The death of the US dollar is not such a sure thing as many believe. We could well see the US dollar get even stronger yet -against other fiat currencies anyway.

In summary…

So in summary it really is anybody’s guess as to how things will pan out. We have posted a few charts lately that look promising, but at the end of the day a chart really just shows you where the price has been – not where it’s going!

You may sleep better knowing that you’ve got some precious metals and some cash as well. That way regardless of how things pan out you’ve got a foot in both camps.

If deflation were to mean gold falls further yet you’ve got some cash to buy more at a later date. But conversely if gold and silver move higher from here you’ve also got a position there too.