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What To Do When the Central Banks Blink

Be prepared to deploy your capital swiftly & purposefully
Wednesday, May 16, 2012, 7:29 AM
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Executive Summary

  • Where the gold price is most likely to go from here
  • History rhymes: Why today resembles 2008
  • How to best deploy your capital once the central banks announce the next round of money printing
  • Why prudent actions you can take now are so much more valuable than the options you'll have once the correction is underway

Part I: Get Ready: We’re About To Have Another 2008-Style Crisis

If you have not yet read Part I, available free to all readers, please click here to read it first.

Part II: What To Do When the Central Banks Blink

Where Gold Goes From Here

While I personally would not part with my gold these days, and certainly not at these prices, I do expect the price of gold to drop going forward.

The reason is that gold has multiple elements contributing to its price, and some of that is attributable to the speculation and rampant liquidity that is sloshing through the system. Various hedge funds and other speculative funds are holding quite a bit of gold, mainly the paper variety, and when they dump that because the tables have turned and/or their liquidity sources have dried up, they will sell that paper gold and the apparent price will go down.

Further, weak hands holding gold via the GLD ETF will be shaken out during a liquidity crisis, putting physical gold back onto the market.

However, it is my strongest contention that this will represent a very nice buying opportunity. Someday, nobody knows when, the central banks will announce another big round of thin-air money printing and that will be a turning point in the price of gold (and many other things, including stocks and commodities).

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