Saturday, May 2, 2009

Crystal ball

I posed this question to subscribers a couple of weeks ago and now I'll ask it again to readers of the blog.

Let's say you have a crystal ball. Yes, an actual working crystal ball. The one catch is that the crystal ball only allows you to see 5 years into the future. It doesn't tell you what's going to happen next week or next year only whats going to happen 5 years from now.

Now let's say that five years from now your crystal ball shows you that the price of gold is going to be $5000 an oz. and silver will be at $150 an oz.

Knowing what the future holds do you take a position in the precious metals market right now and then just start ticking off the days till retirement in Maui or do you worry about where gold is going next week or next month. Do you sit in front of your computer constantly trying to second guess every volatile swing in the bull market?

Now let me ask you this. How many of you think the Fed or any central bank for that matter is going to be raising rates and withdrawing liquidity anytime soon? We all know what happened to the economy when Volker decided to raise rates and fight inflation in the early 80's. It created a double recession and hard times.

Bernanke and every politician in the world is currently hell bent on avoiding pain. How many of you think that we will see the Fed create intentional pain anytime in the future like Volker did? No?

How many of you think they should start ticking off the days to Maui?