During the first two weeks of 2012 we’ve spent some time looking back at what’s happened in the past, considered the possibilities of the future and laid some foundational work in understanding what makes precious metals, and gold in particular, such a sound financial decision. There are several reasons we’ve started the year from this perspective.
As in building a house, if the foundation is flawed, time and the elements will eventually reveal those flaws through cracks, heaving and various forms of deterioration. As one looks down at a crack or heave in the foundation, it may not appear significant at first. But each shift in the foundation places incredible pressures on the structure.
A quarter-inch crack along the foundation or in a stem-wall can result in a one inch gap by the time it reaches the trusses. Or it can cause the wall to begin to separate from the foundation altogether.
This is what we’re attempting to avoid by considering the foundational fundamentals of gold. For some readers this may appear rudimentary, elementary and boring. But for most of us it’s an eye opener, refreshing and reassuring.
Some may have never thought of these aspects of gold. Others may have become myopic with recent gyrations in the markets, losing sight of why they bought gold in the first place. And still others may have simply read with confidence, nodding their heads as they saw their own thoughts revealed in the words of another.
We’ll revisit these thoughts often, from different angles, in order to continuously focus on maintaining a solid foundation. Doing so helps us to continuously build our understanding on truth.
Over the next couple of weeks we have some thoughts that flow naturally from the laying of this foundation. Next week we’ll consider sovereign debt, what it is and how it affects us. It’s far more insidious than most of us realize. And understanding this silent thief helps investors in their consideration of how to approach the future.
Another study that naturally flows from these considerations focuses on inflation. This study may be posted next week, but will likely be revealed the following week as I gather more information. I can assure you that the findings are illuminating and worth the wait.
Let the reader rest assured that The Gold Informant will continue pouring over newsletters, analysis, articles, blogs, charts and whatever else he can get his hands on in order to keep abreast of the fundamentals of this shiny yellow metal, and its white cousin(s).
Some final thoughts: As we close this week the DIA continues to surge somewhat, the dollar dallies below 81 and other market numbers remain relatively flat. Miners seem to be gathering interest, as we’ve seen a dramatic increase in open calls. Gold and silver seem to be getting their legs back, more than likely gathering themselves for the next spike (February, March, ??). Is this the calm before the storm? While anything could happen, I wouldn’t expect a huge surge during January. But, markets are about as predictable as earthquakes. You know something’s bound to happen, but pinpointing exactly where, when and how much is impossible.
Instead, we’ll continue to consider the basics even as we strive to grasp how the intricacies of the markets affect our favorite metals. May your foundation be strong, your walls solid and your confidence as unwavering as the truth that informs it. Have a wonderful weekend.
For your prosperity,
The Gold Informant