Posts Tagged ‘gold bubble’



Precious metal is a well kept secret. Folks who own physical gold, or silver, seldom advertise their wise discretion. Few blab across social networking and less openly discuss the nuts and bolts of buying PM (precious metal). In most cases this leaves you, the novice, searching for the right metal offered at a fair price. It’s hard for me to put an exact percentage on how many newbies pay far beyond necessary but I will estimate more than half do, or receive less, than the metal recommended here at TPS (The Prospector Site).

FACT #1: Not all Gold is good

It is a misnomer that gold is always a good investment (paper gold can be the worst choice for wealth storage in many cases). Anything other than physical PM carries far too much risk considering our age of fiat correction and financial insecurity. For this reason alone paper PM is not worthy of today’s discussion or space.

Retail gold, like jewelry, is a blend of artistic effort and precious metal. An established value is always subjective but, nevertheless, still a store of value better than most of today’s “typical” investments. In times of economic despair jewelry returns to a value measured in melt worth. This is why I recommend new bullion, rounds or bars over jewelry.

All physical PM buyers pay a fee over and above the intrinsic value of a gold bar, round, nugget, bullion, etc. This “premium” is what makes those selling PM wealthy but offers no real value to you as the buyer. The older (or rarer) the gold hunk the higher the premium, very simple. In return…….. new bullion, rounds, and bars offer the lowest premium.

Most folks buying gold in 2013 are not collectors or speculators. They, gold owners that is, view the echos of economic recovery as back-ground noise and realize we very well could be facing the end of a great fiat currency experiment. For this reason alone all should own physical silver or gold.

I recommend due diligence before buying your first gram of gold. Old coins are cool but best saved for the experienced PM buyer. Proof coins are flashy but also best saved for those solidly vested in raw precious metal beforehand. Think low-premium PM offerings that are easy to store, insure, and someday sell or trade.

FACT #2: Not all PM advice is good

This site doesn’t sell silver or gold but I would love to know how many precious-metal peddlers hear, “I understand gold is a good investment. What do you recommend?” At such time the art of buying or selling PM is in the hands of a stranger who could be more profit inclined than making sure you receive the best bang for your buck.

I hear so many nightmare stories of good gold intentions going bad. These tales always include trust, deceit, disillusion, distaste, and eventually embarrassment. At the end of the day far too many pay far more than necessary, for PM, because they fail to arm themselves with education.

There is no reason to fall prey to the PM distrustful, not in the internet age. Your education should not come by way of solicitation. Hard asset sellers are always well rehearsed with trigger words and phrases. These trigger phrases stir emotion and prompt protection but have no place for those implementing a controlled PM plan.

The best source for education and advice always comes from the unbiased.

FACT #3: You will someday sell

I have a close friend that has owned physical silver for years. He has no plans to ever sell regardless the value, regardless the offering. What he doesn’t realize is that someday he or someone sharing his last name will sell, or trade, his buckets of silver. It could be for profit, it could be for freedom, or it could be to feed the family, who knows…… but it will trade hands someday.

I personally will not buy silver or gold that I can’t easily track real-time value. Sure owning a coin that spent hundreds of years lost at sea is cool but how does the average Joe know its true value. After all, the only guarantee we have is a fluctuating melt value, right? For this reason I recommend asking two questions before committing to buy; how much are you asking and how much you will pay me to buy it back.

The difference between the two prices is very important. As of August 25th, 2013, a one-ounce gold bullion will run a buyer around $1475. The same bullion, less the premium, will sell around $1390-$1400ish. A second-hand market will bring a few more dollars. By the way, some PM buybacks require a dealer or broker to notify the IRS, some won’t. Do you know the difference?

But our faith in PM has less to do with dollars with each passing deficit day. Gold’s true value is its exchange value. For instance, I pay less attention to what gold trades in dollars compared to how many ounces of gold it takes to buy an average home in my neck of the woods or a sandy retreat countries away. This exchange value is the future gauge of your net worth. Dollar value is relevant now but this could change quickly.

QUESTION: Thanks for answering my questions, DC. Yes, it’ll be scary if the governments get creative and do something like Operation Rize. Can’t agree more about diversification. As for the insurance, I think I’ll ask a jewelry store nearby first.

And what do you think is likely to happen in the future? Will we have a repetition of what happened in 1980, where PM prices skyrocketed and retraced later? But considering the world’s current level of debt, can the central banks raise the interest rates like they did back then? Or will we have hyperinflation? But are the central banks so stupid to allow that to happen? Will we stick to PMs forever, or will we have to switch to other assets someday?

Looking forward to your reply and thank you very much.

TPS Reply: You’re welcome, thanks for asking great questions. What happened to PMs in 1979-80 was amazing but only a small sample of our future. So many things have changed on a global level that will affect us all on some capacity. Some will prosper but most will fall victim to an existence that only existed because of a debt-based lifestyle.  I have great concern for those not PM protected.

TPS often hears from readers who boast over their debt-free lifestyle. This is great, and recommended, but the truth is all will fill the pain of worldwide default as it becomes painfully obvious trillion $ obligations can never be repaid. This mess is what happens when we live in a society consumed by the here and now. Our commerce world has consumed the minds and energy of far too many.

You’re right; central banks will send all major currencies into a level of inflation unimaginable. I’m not sure if hyperinflation is the correct term but, nevertheless, it will not be kind to those attempting to live on a fixed pension or income. Most victims will view these days of economic correction (disaster) as “depressed” not realizing such a time is nothing more than another example of what happens when a fiat currency is overproduced. Silver and gold will account accordingly.

A dangerous trio has hijacked America’s future. The FED (central bank), Wall Street and politicians now control our economy. Washington DC proper now boasts an economic boom while the rest of America suffers from a myriad of challenges including, but not limited to, low-paying jobs, rising cost of living, financial tension, etc.

The world’s central banks circle the wagons in order to save our fragile banking system but not willing admit this effort is futile, destructive, and unfair. Anyone relying on a currency, not real money or hard assets, will, too, soon realize wealth stored in paper is growing worthless. Such an era will bode well for those holding physical silver/gold and my prediction is this run will not end anytime soon.

Although, we will reach a point when other assets will become so affordable, in terms of gold/silver, that the temptation to barter will flush wealth out of PMs and back to traditional assets (like real estate, stocks, etc). I don’t see a PM bubble anytime soon, nor do I see anyone holding PM in a hurry to trade. Thanks for the great questions and comment.

QUESTION:  Have you noticed the national debt clock? This is only possible because of our digital non-existent currency age.

TPS Reply:  Yep, it keeps rising, right? This is what happens when a government grows beyond its tax base. My recommendation is to keep stacking silver and gold until it stops.

Our transition to a digital currency is right on time. How else can a currency realize such creation on a global level? We are in the fourth quarter of a fiat currency meltdown created, and now propelled, by nothing more than greed and a political failure to transmit honesty, integrity, and strength. Other than that — this administration and other political leaders are doing a fine job by systematically dismantling our country piece by piece.


DC Carlton is founder of The Prospector Site and author of the Amazon Kindle #1 Bestsellers Why Silver and Gold Will Go Higher and Storing Silver & Gold. If you’re looking for trustworthy PM assistance feel free to contact DC regarding his personalized consulting service. TPS doesn’t sell silver or gold; we represent you, the buyer, looking for affordable precious metal from honest trustworthy sources. Feel free to register here for his free online newsletter that provides precious metal insight rarely mentioned from mainstream media sources.






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In all likelihood your home or apartment has an inconspicuous looking device attached to the ceiling, probably more than one. This device has saved untold lives and is a priceless addition to your family; by law each new home or new renovation must include this device. By now you realize the item I’m describing today is a smoke detector.  The primary goal of a smoke detector is not to detect smoke; it is to sound alarm of eminent danger. Unfortunately, few can hear the harmonic sound of an economy in correction, even less realize where there’s smoke there’s usually fire.

Not a day passes without a reader emailing, or calling, TPS to ask what PM I’m buying. The answer is “silver” and the reason is nothing more than the primal desire to survive and preserve. Why so few Americans fail to react to this internal beacon is beyond me. I’m so very glad you’re excluded from this clueless trend sweeping our nation but what if I said physical silver alone is not enough?

Bells and whistles are blaring all around us even as your read these words. Few hear the ringing because most folks view danger based on the reaction of others. It is a proven fact that if enough folks take flight others will follow without knowing why. Unfortunately, the opposite is true too. On a 1-10 scale, I would gauge the flight to precious metals slightly above 1, as of April 2013.

This lack of urgency spawns inaction by business owners, college students, wage earners and retirees. All the above are on the cusps of no longer controlling their monetary future because they fail to recognize how quickly technology can separate our wealth from our control; the video below is but one real-time example.

Economists often compare the Great Depression with today even though this is impossible. The Great Depression was a slow burn that consumed untold wealth over several years. The US economy was primarily “local” in nature unlike today’s global age we’re living. At such time, silver, gold, and the US dollar were all real money.

A monetary life in 2013 is much different. Almost instantly our financial world can be contained by a banking lockout, this usually happens on a Friday afternoon. The video above accurately describes the challenges of every individual who still trusts, therefor stores, personal wealth within a banking system. The powers in control realize the best way to control your wealth…..not to mention preserve their power, is to quickly lock the exits before you can transfer personal capital (savings).

NOTE:  Cyprus bank depositors are allowed to withdraw no more than a few hundred euros per day; this came after an eight day bank holiday.

The political machine realizes the best way to keep the village distracted is to pipe in the soothing sounds of recovery, stability, and economic opportunity. It matters little if true, it only matters that you believe it because if you don’t the powers in control will enforce control. Reminds this writer of an abusive spouse who punishes but only because the victim deserves it.

I’ll say it loud and clear, I’m not a good victim. Since you’re reading today I’m guessing neither are you. The thought of an overreaching bureaucracy divvying out my wealth byway of an ATM ration doesn’t resonate well. I refuse to allow a bank to control how much I spend, where I spend, and on what I spend. This reason alone is why I recommend storing cash as well as physical PM.

Precious metals are in my opinion the best long-term store of wealth. The problem is the only way PM can convert to cash is by selling. We don’t want to sell our silver, or gold; this is why it’s important to understand a world accustom to trading in dollars, a.k.a. cash, will confuse real money with physical dollars, especially in times of banking volatility or unsuspected bank holidays. A Cyprus glimpse proves my point better than I can.

This is why cold hard cash is king, short-term speaking, as shown at the 3:00 minute segment in the above video. A loss of faith within the banking industry will lead to a run on cash.

The play of the day is twofold. I strongly encourage each reader to consider physical silver, while still available, along with a couple thousand dollars in cash and, as always, 1/3 STORED WITHIN ARM’S REACH. If you’re finding this confusing please email or call TPS for assistance in formulating a personal plan that best fits your need.

QUESTION:  I made my first gold purchase a few months ago and ever since it has done nothing but decline. I realize this is all part of the risk but it is a little discouraging. Any words of encouragement?

TPS Reply:  Thanks for reading TPS and taking the time to send over your question. It is always somewhat disheartening when metal prices decline like they have over the last few weeks. For what it’s worth……I too bought physical gold only to watch it decline 23%. The only difference is this was back in 2008 when I paid somewhere around $980 per gold ounce. I recall feeling a little foolish with my “investment” but today my only regret is that I didn’t buy more at the time.

The key word just mentioned is time. We can’t ignore the great economic or monetary challenges of our day. A rising, and soon to bubble over, DJIA is not a sign of an improving economy, neither is a low interest rate infused housing market. Both the DOW and housing are responding to the benefits of currency creation, the cash must go somewhere, right?

Since you’re taking the time to read unbiased PM sources then you must also realize precious metal is a long-term play. Don’t confuse month to month PM movements with validation. Safe havens and real assets are still the best options for realistically minded individuals; regardless how they measure up in dollars (by the way, gold is rising in other currencies. This is why it’s impossible to validate PM gauged in just one currency OR over one moment in time).

I’m not a good gambler; this is why I continue to invest my dollars into PM while watching other investment foolishness from the sidelines. Your decision to buy gold cannot be validated by a rise no more than vilified by a decline soon after (purchasing). My advice is to keep an eye on the long-term goal of wealth preservation realizing what is “real” is real and what is “not” isn’t.

If the price of gold drops to $1300 an ounce tomorrow, so be it. If it jumps to $2200 next week, so be it too. The dollar (number) next to gold means nothing since all markets are affected, either positively or negatively, by forces well beyond our control. Historically speaking, such market interventions rarely last longer than a season. This is why I view my PM as a long-term safe haven.

COMMENT:  Couldn’t agree more with your book’s chapter on real estate. Thanks for keeping it real in an age of confusion.

TPS Reply:  Thank you for taking the time to self-educate. It really comes down to knowledge, doesn’t it? Too many are rushing back to real estate with an improper mindset. Housing is a place to raise families and extinguish birthday candles. It’s always great when it appreciates but the primary goal of home ownership is not an avenue of saving or wealth building.

Here is the question each potential home buyer must ask PRIOR to inking an offer. How much of the home’s value derives from nothing more than the ability to borrow currency at a low rate of interest. This portion, or percentage, of the home’s value is susceptible to market volatility beyond the realm of short-term fluctuations.

It is only because of those who benefit from lending, building, or selling real estate that so many have a false belief in real estate as a good investment. The cheap money used to buy today’s real estate is nothing more than a byproduct of a government in perpetual money creation mode. Cheap interest rates only punish the savers of the world and blur true housing values.

My opinion is we’ll see a day when 20 ounces of gold will buy more homes than not.

QUESTION:  What is causing gold and silver to drop so suddenly today?

TPS Reply:  Great question. The only words I can think of to describe such PM brutality are manipulation, intervention, greed, fear, and corruption. It is impossible to believe a free unrestricted market is the cause of our recent PM correction.  The games happening within the PM market are nothing short of criminal and here’s why.

Gold or silver are nowhere near bubble territory, the charts below clearly show how quickly an asset, like housing, will climb just before correcting or bursting. It is understood that when a particular asset raises too quickly that eventually it will become prone to correct.

Now, let’s look at the bigger picture here since it’s becoming extremely obvious that PMs are under full assault. With the threat of war (both militarily and monetarily), economic uncertainty, and perpetual currency printing, precious metals priced in dollars should be steadily climbing. But this is not the case.

What is not declining is the demand for physical metal. This demand is quickly depleting metal inventories as buyers like you, I hope, take advantage of cheap silver or gold. Such a demand will continue to disconnect physical metal prices from paper price manipulation. At such a time no one selling physical PM will give an ounce of attention to the paper PM market.

Speaking of a gold bubble, it could help to show what a true asset bubble bursting looks like. Below is a chart showing how quickly housing values rose just before the housing bubble burst back in 2005-06. Then compare the next chart showing the Dot-com build and bust back in 2000-01.


And now, does the last six months in gold look anything close to a bubble?


Below is one last chart I want to add just before posting. It shows the virtual currency Bitcoin just days before it recently corrected. If gold were as vertical as this last chart then “yes” I would have to say PMs have reached a dangerous level in need of correction, but not the case.



FED chief Bernanke is the most powerful man on earth. Unfortunately, his ability to accurately gauge how money printing and market manipulations lead to asset bubble’s bursting should be of great concern. Dr. Paul Craig Roberts offered a commonsense approach to why precious metals are under FED assault.

“The exchange value of the dollar is threatened, and if that collapses the FED loses control over interest rates. Then the bond market blows up, the stock market blows up, and the banks that are too big to fail, fail. So it’s an act of desperation because they’ve got to establish in people’s minds that the dollar is the only safe place, it is the only safe haven, not gold, not silver, and not other currencies.” -Dr. Paul Craig Roberts.


DC Carlton is the founder of The Prospector Site and author of Why Silver and Gold Will Go Higher. If you’re looking for trustworthy PM assistance feel free to contact DC regarding his personalized consulting service. TPS doesn’t sell silver or gold; we represent you, the buyer, looking for affordable precious metal from honest trustworthy sources. Feel free to register here for his free online newsletter that provides precious metal insight rarely mentioned from mainstream media sources.



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A goal of this site is to provide evidence why buying gold or silver, hopefully both, is wise.  But the truth is we realize most will wait until both metal prices climb substantially before jumping in.  By nature we chase investments believing the majority brings safety and security but the opposite is true. We only have to look back a few months ago when silver spiked to near record highs as proof.  My personal phone rang off the hook when silver climbed day after day but now sits silent with silver prices discounted 30%, crazy.

If you’re new to gold and silver, thanks for spending time on our site. We understand the confusion when it comes to precious metal so hopefully this site, among others, will help clear some confusion.  We do recommend taking time to fully understand not only what and how to buy but also where and when to sell.  The selling side of gold should be way down the road but it’s possible you may sell some of your stash sooner than planned.  It’s good to know your savings is in real money like gold or silver.

If someone was to ask me what the biggest mistake a person can make, about gold/silver, I would have to say it’s chasing after gold or silver (not owning gold is the only thing worse). We realize this chasing mentality comes from an age when each person can easily be their own financial adviser.  We’re not saying taking control of your financial future is a bad thing because we advocate this type of independence.  The problem arises when our perception is to follow (financially) rather than spot a trend and react.  So how can you use this fact to further profit and save?  Well, I’m glad you asked.

The prospect of chasing today’s investment world is as vast as ever before. Literally billions of investors have entered the investment world over the last decade or so.  This means more money than ever is looking for a place to profit and save all while volatility becomes the new normal.  But what does a perfect storm of new investors, newly printed money, and volatility, mean for gold/silver?  We believe this combination equals metal prices unimaginable to most of the investment world and here is why.

Gold/silver has always been a stable source of real money and history proves this as fact. We believe both metals will trickle upward while assets and investments dependent on bailouts and stimulus continue to sputter.  The one thing all investors have in common is they want to profit.  There is little doubt most investors will liquidate bad investments (even willing to take a loss) and reinvest in gold/silver.  This is what we mean by chasing gold and silver.  So the question remains; will those chasing gold profit? Yes, but.

Just for the record we are speculating from here forward by offering our best opinion. We believe when gold/silver begin to see masses of new money (chasers) both metals will begin a bubble phase similar to American real estate early 2003. This bubble could last for years if things play out the way we believe they will.  If currencies around the world continue to print money gold/silver will continue to profit.  Never before has so many fiat based currencies attempted to print their way to prosperity and recovery.  The temptation to chase gold and silver will last at least as long as this money printing (look for creative ways to reword artificial money printing).

Now might be a good time to consider gold and silver!!

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This could surprise some readers but the most important decision gold owners will make is not buying but when to sell.  Of course we recommend buy and hold at this time but part of formulating an independent understanding of precious metal is knowing when to sell it.  This fact is very important because most gold advice, up to this point at least, comes from entities that profit from selling folks like you gold/silver.  The problem with this source of information is obvious and it’s doubtful those peddling gold will advocate selling, regardless how big of a gold bubble.

If we agree there will be a best time to sell gold then the next question has to be how will we know when? Will the time to sell be the same for Chinese as Americans?  The simple truth is no one knows exactly when gold will tumble downward but understanding that it will is very important. Again, we understand people new to gold are asking why bring up selling to those recently committed to buying gold?  We want everyone to realize gold is a wealth transport and like all transports there will be a time to depart and move on.  Those that don’t leave will ride gold back to the bottom.

Look no further than housing by example. Not long ago folks stood in line to buy residential real estate like it was on sale.  Actually, homes were the furthest from on sale as greed and credit inflated a housing bubble lasting for years.  Our question for you is where did the equity go?  The home once worth $400k but now worth $200K (and still declining) still sits at the same location.  Few Realtors, bankers, or mortgage brokers, warned new buyers of a bubble even at bubble’s peak. No one making money wants to hear that the party is over, not the ones selling and not the ones with growing equity.

But what if a homeowner sold toward the top of the bubble? What if a person realized masses of fresh money clamoring into any asset will create a bubble?  The equity was only real when those prudent sold or moved equity into another asset PRIOR to the bubble popping.  Gold will be no different. We receive many emails from readers asking how to know when gold has reached a bubble.  If gold finds itself in the same housing frenzy then a bubble is forming.  No one will know the peak until after the burst but we are willing to share a few indicators.

Guessing gold’s peak is different from guessing our housing example above. Housing exploded purely out of greed and easy credit.  Gold’s spike is entirely different at least in our opinion.  Sure some will buy gold motivated by greed but we feel the masses will buy gold from pure desperation.  Look at the economic instability gripping the world today.  The best many countries can hope for is a new bailout, again.  There has never been as much economic volatility as today leading many to ask what’s next?  Default is a word the next generation will know well.  Desperate folks will not ignore gold in such a time and this will only compound its demand, and price.

Recently our local high school football team made it to a state championship game.  The stadium was full of fans, both sides, eager to watch local talent compete.  The oddity was less than a month earlier both teams played each other in front of just a few hundred fans.  By nature we gravitate to excitement.  When gold becomes exciting, even to those not following gold, then you can bet speculation is in full bubble participation. This could go on for years or it could move a long quickly.  Watch for nonstop chatter of a “New Gold Rush” or “Gold Spikes Again” as headlines and breaking news.

Ben Sherwood wrote a best-selling book called The Survivors Club.  Mr. Sherwood spent time with survivors of all kinds of disasters to see why some survive when others don’t.  He found the difference between the two is survivors locate exits, before disaster strikes, willing to react quickly.  Few survivors find themselves caught off guard because survivors realize assumption and complacency have no place among the independent.  What we can learn from The Survivors Club is old sources of saving/making money no longer work today. Knowing where the exits are, before financial disaster hits, is a must.  Understanding when to sell your gold is the most important decision a gold holder will make.

Thanks to all our new readers, loyal ones too, for following our series on “Keeping Gold Simple”.  We realize new and unbiased precious metal information is difficult to find and this is a big reason we started www.theprospectorsite.com.

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We track the number of readers daily here at www.theprospectorsite.com. You may find interest in some of our tracking results because they are beginning to tell us more about ourselves than maybe we care to see.  When gold is roaring our numbers are up, way up in fact.  But when gold starts to dip like it has lately our daily numbers are down, way down in fact.  Is this a coincidence?  Is gold really crashing as we settle closer to $1600 per ounce?  Maybe a closer look will answer your questions and possibly relieve a little anguish some gold holders may have.

Gold and silver markets are as worldwide as they have ever been. Less than 14% of precious metal ownership is in the USA as countries like India and China invest heavily in precious metal via bullion and jewelry.  The fact is countries with less safety nets tend to see more private metal ownership mainly because private citizens realize importance of self-preservation. It is sad to say but Americans don’t own metal (savings) because they honestly believe government will always be there in time of need.  This is a huge mistake and in all likelihood will decimate our middle class in America over the next decade.

So what is behind this big decline in precious metal? Gold went from $1900 to just over $1600 per ounce just as experts predicted $2000 gold by year’s end.  Did these usually accurate experts make a mistake in their gold predictions?  Yep, they sure did but it’s not what you may think.  The only mistake made is putting a timeline on gold’s enormous historical spike. Today’s gold experts are very good at formulating deficits compared to GDP but sometimes miss the most important driver of economic trends, human emotion.

Let’s break it down. Stock markets starting selling off over the last few weeks as nervous investors flashed back to the crisis of 08.  Not to be burned this time, stock holders sold off more dollars in stock than the 08 crash.  It was very controlled and somewhat silent as billions of dollars sold from stocks but the question is where did the money land?  It landed on the best of the worst, the US Dollar.  This transfer of money drove up the dollar as countries worldwide lost faith in stocks and the euro.  As I write, the USD index is at 78.35 when for months it bounced around 74.8.


Gold is usually opposite of the dollar. If gold is up then you can almost bet the dollar is down.  The world’s reserve currency is the USD and nearly all have a vested interest in it.  It is no secret many countries hold USD because of a trusted track record.  It is also no secret Europe is in big trouble and the declining euro (currency) is showing nervous investors running for high ground (dollars).  Combine this with a worldwide stock sale-off and it’s easy to see why the dollar looks far better to investors than it should.  The question is how long can this dollar facade hold until investors run to the only true safe haven ever to exist, GOLD?

The cold truth is each gold dip only rebounds with an increase in which more and more folks can’t afford to protect themselves. We would have to go back to the gold bubble of 1980 to see otherwise.  Gold certainly is not crashing but it is playing left field compared to the USD.  The global path to gold has many stops before reaching the precious metal destination and today the stop is on the dollar.  Tomorrow, who knows?


“Since 2009, the 111th Congress, held between 2009 and early 2011, added over $3.2 trillion to this debt-more than the first 100 sessions of Congress combined.”

“Not only is the United States spending more than ever, it’s doing so at a greater rate.  It’s no wonder the Fed needs to keep interest rates at zero!  If rates were higher, it would cost hundreds of billions more to simply make the interest payments on our national debt.” ANDREW PACKER & THE FINANCIAL BRAIN TRUST/ AFTERSHOCK’S HIGH INCOME GUIDE


“Gold is one of the few assets that remains in positive territory this year, in a sense it is one of the last assets standing, and because of this as investors head for cash they sell the assets that have performed. Essentially gold is a victim of its own success as liquidity trumps,” wrote UBS analyst Edel Tully in a note.  REUTERS.

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It is absolutely imperative to understand the difference between gold/silver dipping compared to a devastating  bubble.  As metals increase, yes my opinion is they will be increasing, more bubble babble should be expected so my advice is to learn how to differentiate the two. The truth is someday gold and silver will run its course, burst, and then take its place  in the back of the asset line.  Today we look at how to tell a bubble from a dip.

This may sound odd but historic prices alone is not a defining sign of a bubble. We have to look beyond selling prices of assets or commodities to truly see who is in the driver’s seat and why.  I doubt I would walk into my grocery store saying, “Look out everyone because these Teddy Grahams are the highest price ever and in danger of spraying cookies down this entire aisle. “  My favorite cookie treat is at an all time high because the cost to make, ship, and then sell is historically high, it’s called inflation.

Most bubbles can be blamed on masses of new money piling into a certain product or asset.  Recently we watched real estate burst from the availability of easy, and cheap, credit making everyone a homeowner even the ones that shouldn’t. This rush to real estate artificially pushed houses to a point unsustainable until the bubble burst leaving many folks asking what happened to future retirement equity.  Now let me ask you, have you seen the same availability of credit driving gold/silver prices upward?  Have we seen herds of people motivated by opinions of hairdressers, cab drivers, and gardeners to buy gold now?  I can tell you from the emails that come into The Prospector Site that 95% of Americans have no clue how or why to buy the safest form of wealth preservation ever to exist.

My definition, a dip is a temporary decline of a solid investment. I completely see the probability of bigger dips as metal prices move upward for one reason, the more new people who turn to precious metals the bigger chance of these same folks selling after realizing some profit.  Many get cold feet and start to doubt the sustainability of assets like gold or silver so selling it is.  One the other side, many, maybe more, are waiting for the dip that comes from profit taking to enter this unknown form of investing we call trading dollars for metal.  Sellers create the dip and buyers turn it back vertical, or sideways, until the process starts all over again.  The crazy thing about this dip/recovery cycle is each time gold and silver adjust itself at a higher price.

Signs of a gold/silver burst will be noticeable for those who truly are motivated by reality and not greed. We can look at the last gold bust, January 1980, recalling constant breaking news updating a new gold high along with every major newspaper driving the new craze, up to $860, to buy into the new gold rush.  The only rush for many was a race back to where gold belonged which was around $400 per oz.  The herd pushed gold into a place not comfortable for gold and the price for many was devastating.  The late herd runners are always late but just in time for the slaughter.  We have all heard how devastating the gold bubble was to some buy many smart investors made a killing just by being in tune to reality.

QUESTION:  I’m new to buying silver and very concerned the price will drop as soon as I invest money into precious metals.  Do you think the price will drop?

ANSWER:  Yes, but I also think the price will rise but you maybe missing the point so let me explain.  Gold, and silver, float with rising prices caused by inflation and devaluations of dollars.  Metal can float down just as easy as it can float up and the direction depends on inflation, and your dollars buying power.  Many are confused how this works so be sure to read tomorrow’s post for more information of what makes gold and silver rise and fall.

TIP OF THE DAY:  Gold/silver are not historically high from being over inflated.  They are historically high because government irresponsibility is historically high by proof of how many borrowed dollars are freely “bailing out” the historically irresponsible.  Until responsibility improves feel free to enjoy the safety of gold and silver.


  • ONE OUNCE SILVER BULLION:                  $46.15

  • ONE OUNCE SILVER ROUND:                      $43.81

  • ONE OUNCE GOLD BULLION:                      $1545

  • ONE OUNCE GOLD BAR:                                $1508

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