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Gold is Ready to Go Very High Very Fast

Hubert Moolman
10 Mar, 2009

It appears that gold is ready to go very high very fast, as measured in all currencies of the world. It seems that gold is in the process of completing the mega cup and handle pattern that started to form in 1980 when gold was at about US$850. The interesting part is the fact that it seems that we are in the final phase which should take us to about US$1,300 (about R 14 000) and eventually to about US$1,700 (about R 18 760) in a very short time relative to the 29 years since 1980. Do not be surprised to see $50, $100 and more up days, should key levels be broken.

The correction to about US $900 (and so far reversal to US $ 939) was the confirmation that the pattern is still very much on course. It seems that all major corrections, as is the nature of this pattern, are now completed. It now needs to get up to US$ 1000 and just above in a short period (with very brief minor corrections on the way there. For more on this cup and handle formation see the article by Jordan Roy-Byrne/Trendsman.

I have to state that it is not the potential high paper prices that make me bullish about gold, but its fundamental nature, and the current situation the world finds itself in. It is not the paper price, but what you can buy with it that matters.

During the correction, it was an opportune time to remind myself of why I am storing my wealth in gold and silver.

This is some of what I came up with: (please note that I am mostly repeating what I wrote previously, but that is exactly what I was doing - reminding myself).

Gold and silver is money and money is gold and silver, and money (real, not paper) is the safest and most consistent store of wealth over long periods of time and is especially important during times of uncertainty. There is a lot of fear and uncertainty today, therefore I store what little wealth I have in money, I store it in gold and silver.

As time passes, more people are realising the fact that the world's monetary system is fraud and that gold and silver is real money and not the paper money that the world uses today. The traffic is one-way, more, not less people come to the realisation that paper money is fraud and ditch it for gold and silver (the potential is huge). Maybe, right now someone who is reading this is ditching paper money for gold and silver. This fact is what makes me most bullish about silver, since it is the form of money that has the greatest potential due to the fact that it has more room to move from where it is (a demonetized monetary asset) to a fully monetized asset.

The debt levels in the world are enormous, and it is an inescapable fact that debt can only be properly and fully settled with real assets. Some assets are better than others when it comes to discharging debt. Gold and silver are real assets, and due to the fact that they are money, they are the ultimate form of payment and settlement of debt.

Due to these enormous debt levels, assets that are acceptable as proper settlement of debt will be in huge demand if these debts are to be properly settled; and this hold true whether debt levels are extinguished by default as well. Gold and silver is in huge demand, and this will accelerate.

Should the big debtors of the world attempt to "settle" their debt with more debt (inflationary) such as paper promises (like what is currently happening), then paper prices of real assets will explode, with gold and silver leading the way.

Paper money, bonds and other promises to pay are all subject to possible default, and during these times, default is a very common occurrence. Real assets are not subject to default, and gold and silver are real assets that you can hold in your hand, and are financially liquid (liquidity is even more essential during such times).

Paper money, bonds and other promises to pay are certainly at risk of impairment during these deflationary times, due to possible partial default or delays due to lack of debtors' ability to pay on time due to liquidity constraints. Remember an assets' value to you is less if you are not able to use it when required.

During inflationary times you are at risk, because although you might get the promised payment, by the time you get it, it has lost a lot of its value and basically all of its value during hyperinflation.

This is all I have time for now, however it is enough to help me confirm that gold and silver is the best option when it comes to storing my wealth.


9 Mar, 2009
Hubert Moolman CA (SA)
Cape Town
South Africa

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Hubert Moolman is a Partner at ProAct Chartered Accountants and the owner of HGM & Associates.

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