Gold Consolidates Inauguration Day Gains

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". . .the best one can do is seek to preserve wealth as best one can. Physical gold, held in your own possession has served that role for thousands of years."

Gold has adopted a consolidative tone in the wake of solid gains on Tuesday. A second consecutive inside day (higher low/lower high) has formed. However, the overall technical tone remains favorable after important resistances gave way earlier in the week.

News on the housing front remains grim. Efforts by the government to mitigate the crisis have been ineffective to date, despite the astronomical numbers. However, the path they have chosen is a difficult one to turn back from.

It seems the new administration in Washington is going to stick with the plan. Massive monetary expansion and 0% interest rates to prevent broad-based deflation. Unfortunately, most of this money is going into the same banking system whose aggressive quest for yield and seemingly total disregard for risk precipitated the whole crisis.

George Cooper and I had a conference call the other day with a banking contact of his in Germany. He's been a banker for many decades and is one of the sharpest minds I get the pleasure to pick periodically. The banker pointed out that the crisis was as much a result of ego as anything else, saying: "The banker used to be the king of the businessmen. Today he is the king of the gamblers."

Risk can be an addictive thing. Those that survive the current crisis are likely going to be back out there searching for yield again in the future. Probably a little more cautiously at first, but time has a way of dulling ones memory. Those with big egos are quick to assess blame elsewhere.

When the bill for all these excesses finally comes due—and it will come due—all of us are going to pay. That bill grows larger every day and the best one can do is seek to preserve wealth as best one can. Physical gold, held in your own possession has served that role for thousands of years.

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