I’m sure most of my not-so-loyal readers have noticed the Dow Jones Industrial Index has dropped some 1000points almost this week. On Friday it closed at 11.4k, while at the moment its value is 10.6k.
That is 1 troy ounce worth of gold at the current market price of $850/ounce. Wow.
What we are seeing is a major market correction, one that has been in the making for a long period of time. Many fantastic politicians and investors, such as Ron Paul and Peter Schiff, have seen this coming and have advised their followers to move to gold – or at least to different markets such as Asia or Europe. I’ve stayed out of the game up until now since I haven’t had any money invested, period, I’m a college student so I don’t have that kind of leeway.
This terrific dive is caused by Federal Reserve simply creating more money to pay for things such as the Iraq War, Aid to Israel, and this whole Fannie/Freddie bailout thing, throwing huge inflation into the market, which you are now feeling at the gas pumps or whenever you feel like “eating.”
The inflation we are seeing on gold in the past 8 years (the length of time the neo-cons have been in office) is 290%, or some 36% a year on average. I use gold because that is a “stable” medium, as inflation occurs it is more expensive to buy gold, likewise, as deflation occurs it is cheaper to get gold. This stability is actually why gold and silver are the only true legal currencies in the United States, as opposed to the FIAT system in place now.
Back to the topic at hand, if the DOW had kept up with “gold-flation” we would have seen the DOW in the 29,000 range, perhaps even in the 30,000 point range. At this point I’m really hoping little alarm bells start going off in your head. Why? Because the DOW has lost value, a considerable amount of value. Like, more than half its value in just a short amount of time.
And as you might be able to guess, this catastrophic decline in value is going to continue for a good amount of time. You still have time to get out, but do so quickly.
For the time being silver is cheap, though it doesn’t fluctuate as much as gold, which went up more than $60 so far today, it has a lot to gain, its paper value is below $12/ounce. If you can manage to find a broker willing to sell you silver for that price, do it. The only direction your investment can go is up.