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Bet on Gold, Not on Funny Money
Gold recently dropped more than $100, or 14 percent, after hitting a 26-year high of $730 in mid-May. With that drop in price, I became a buyer of gold once again.
Can the price of gold go lower? Absolutely. If it drops to $500 an ounce, I'll buy more. Let me tell you why. Continue below.
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But first, to give you some background, I've been in the gold market since 1971, when then-President Nixon took the U.S. dollar off the gold standard.
Back then, gold was pegged at $35 an ounce, and ran to a high of $850 an ounce by January 1980. In the same period, silver hit approximately $40 an ounce.
Today, as I write, silver is around $13 an ounce. So I've seen the price of precious metals go up and down.
Mining a Hunch
In 1996, I founded a gold mining company in China and a silver mining company in South America. Both companies eventually became publicly traded on the Canadian Exchanges.
I formed gold and silver mining companies then because I believed that gold and silver were at "lows" and were set to come back up. At the time, gold was around $275 an ounce and silver was around $5 an ounce. If I'd been wrong, I would have lost the mines.
I was confident about gold and silver because I wasn't betting on them. Rather, I was betting against the dollar and oil. In 1996, oil was about $10 a barrel, and that seemed low. My suspicions were that the dollar was strong, and I believed it would drop when oil went higher. I felt the conditions were right for a massive change in the markets. So far, I've been pretty accurate.
I'm confident that those conditions haven't changed. With the current national debt, balance of trade, and ongoing war in Iraq, the dollar is growing weaker and oil is going higher. That's why I recently bought more gold as well as more silver -- to bet against the dollar and oil yet again.
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