First, it was the housing bubble. Back in 2005 there were “We Buy Houses” signs on every street corner. Investors were buying up houses like crazy, and I was in the middle of it all. From 2001 – 2006 I helped fund over $180 million in real estate financing. I started originating mortgages when I was a 17 year old high school kid, then worked my way up to negotiating sub prime loan terms with large banks for some of the biggest home builders in America. I had a front row seat to the credit crisis, and saw exactly how human fear and greed created the whole thing.
Then, in 2010 I noticed another bubble starting to form – gold. Just like I had seen in real estate, I noticed people being emotionally bullish on gold. Pawn shops starting putting “We Buy Gold” signs up in their windows, and we started to see TV ads telling people to mail their gold jewelry in for cash. Popular financial gurus like Peter Schiff told people to buy gold at the high in 2011. People were buying gold like crazy due to the fear of missing out, or the fear of the dollar crashing.
Throughout 2012, people remained optimistic about gold even though it was failing to break the all time high of $1,921.50. Eventually, the market started to put in lower highs, and put in support around $1,500. Then, on April 12th, 2013 gold cracked support that caused a wave of panic, sending prices lower by about 15% in two days. The market would continue to sell off another 10% in the next couple of months.
As of mid-2014, gold prices have sold off about about 50% of their value from the bull market that started in 2004. In the spirit of “buy low, sell high”, I think now is the first good time since 2009 to start accumulating more gold. I'm not saying this is the bottom of gold prices, but I think it's a great area to start buying for a long-term investment and hedge against inflation.
My Current Gold Investing Plan
I'm currently buying gold starting at about $1,200 an ounce, and will continue to accumulate if prices fall to the next major support level around $900. My plan is to buy a mixture of gold bullion bars and coins, and add some gold ETFs to my stock portfolio.
I'm going to be hosting a free webinar showing you the best way to buy gold, how to avoid scams, and the best countries to store your gold. Click here to reserve your spot for the live gold investing webinar.
Let me make something very clear – I am NOT buying gold right now with the hope that gold's going to sky-rocket to $2,000 over the next few months. If that happens, great, but it will probably be due to high inflation. Rather, my investment thesis is to use gold as a hedge against inflation, and a store of value in the highly probable event that the dollar continues to lose value.
A Recap Of My Gold & Silver Investing Plan:
- Start accumulating gold as a protection against inflation
- Buy physical gold & silver bullion
- Store bullion both inside the U.S. and abroad
- Invest a smaller percentage in gold ETFs
- Day trade gold (not silver) only in times of high volatility
Crypto-Currencies As Another Store Of Value & Hedge Against Inflation
I'm also still bullish on crypto-currencies as another store of value and hedge against inflation. Even if Bitcoin doesn't crack it's all time highs above $1,163 for a long time, I still think people should educate themselves on crypto-currencies because, mark my words, digital currencies are here to stay. They may look and operate completely different a year or two from now, but the age of decentralized peer-to-peer currencies is only in its infancy stage.
In the short-term, there is a lot of uncertainty and fear around Bitcoin. China is doing practically everything it can to ban the currency, credit card companies are lobbying against Bitcoin in the U.S., and the general population has “trust issues” with crypto's. To be frank, I don't blame people for not wanting to throw a large portion of their portfolio into Bitcoin. As I've said many times over the past year, Bitcoin is still extremely risky, and nobody knows what will happen in the long-term.
My game plan for Bitcoin is to continue to trade it only during times of high volatility, and slowly accumulate Bitcoins for the long-term on panics and market crashes. I will not buy on spikes or bullish trends, because the market continues to get crushed with bag holders.
Make sure to register for my gold investing webinar where I'm going to show you the research I've been doing the past couple of years, and show you how to invest wisely. Click here to reserve your spot for the live gold investing webinar.