Few things excite people as much as a horse race or gold!
Gold briefly took a backseat behind a horse named "I'll Have Another." This horse was never expected to be a champion. After dramatic victories in the Kentucky Derby and the Preakness Stakes, however, he was poised to become the first horse in 34 years to win the incredibly rare and coveted "Triple Crown."
Unfortunately, due to an injury, the opportunity is gone. His trainer had to pull him from the race.
"I'll Have Another" had an opportunity to become one of only 12 horses in history to win all 3 "jewels" of horse racing - the Kentucky Derby, the Preakness Stakes, and the Belmont Stakes. He could have become the 12th "Triple Crown" winner in history! Instead, he is the 12th horse since 1978 to miss the opportunity, after winning the first two races.
So what does this horse have to do with gold? "I'll Have Another" has lost the opportunity to achieve an extraordinary accomplishment. Gold, however, still has a chance to solve the world's debt crisis.
Just as the sports enthusiasts of the world were focused upon a horse named "I'll Have Another," the economists, finance ministers, and central bankers of the world are now focused upon gold.
Without delving into the details surrounding fiat currencies and inflation, I'll simply point out the obvious: prices are not rising; the value of your dollar is falling.
Historically, bankrupt governments have always turned to the same bailout mechanism that we see them using today. They devalue their currencies!
You see, the word "inflation" is simply a clever euphemism that masks the reality of currency devaluation. The public's attention is directed to "rising prices" and away from the falling value of the dollar.
So, how does gold fit into this situation? Governments cannot create more gold.
An ounce of gold is an ounce of gold. It is a commodity. It pays no dividend. Its value, essentially, does not change. Its price fluctuates up and down reflecting the fluctuation in value of government currencies and other assets.
When the current US President was inaugurated, it took only 900 of your dollars to purchase one ounce of gold. Today, it takes over 1,500 of your dollars to purchase the same ounce of gold. The gold hasn't risen in value. The value of your dollar has fallen. Your dollars are being devalued.
The dollar is presently strong among other currencies, but only because the dollar is the proverbial "nicest looking house in an ugly neighborhood."
Gold is a safe place to store the value of your wealth. Currency is not a safe place! That's why central banks throughout the world are trading their US dollar reserves for gold.
The International Monetary Fund (IMF) reported that global central bank purchases in 2011 exceeded 400 tons. In March of 2012, the Philippines purchased another 32 tons. In April, Turkey purchased another 29 tons; Mexico purchased an additional 3 tons; Kazakhstan purchased another 2 tons; Ukraine purchased over one ton and tiny Sri Lanka has accumulated over 2 tons.
This is merely a short list of recent purchases. Many other countries do not report their gold purchases. With the central banks of the world trading away their own currencies as well as the US dollar, one has to wonder what they see on the financial horizon.
One thing is certain. The central bankers who are increasing the money supply to pay for deficit spending by their governments, are the same decision-makers who are stocking up on gold and trading away their own currencies and US dollars.
I suppose that it's possible for our politicians to stop the spending and help turn the economy around. Then, perhaps, we could produce the profits necessary to pay off our debts. Realistically, however, no matter who wins the upcoming elections, there are few options other than currency devaluation available to our decision-makers.
Gold does not dominate my trading strategy. Gold simply ranks first (at the moment) among the choices for financial safety. And, gold holds the greatest potential for massive gains. Gold therefore - as a store of value - has a chance to solve the world's debt crisis.
If the central banks continue to devalue the currencies, the price of gold will go higher. If so, the current price of gold represents a true opportunity.
Before the opportunity is gone, have yourself another ounce of gold.
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