Not Investing in Gold is Insanity
By Al Korelin
What a way to spend
the first couple of hours of my day! Getting up
and going downstairs to get my essential cup of
coffee and newspaper and then going from mildly
unhappy because I had to get up to truly
frightened, because I read the local newspaper.
The paper, which normally deals with critical
issues like the progress of the local
professional basketball team, had the following
three front-page articles: “High oil prices here
to stay, say executives”, Expect jolt in utility
bills, too” and “Double-digit declines sap
The conventional press is starting to catch on -
yes the emperor has no clothes.
Let’s examine the implications on consumers of
these articles and how, I believe, their
thinking will change.
Oil prices in the area of $130 per barrel or
more have the capacity to cripple businesses.
Will prices stay at that level for a while? Here
is what the Associated Press had to say on July
first, “As oil set a new record, top industry
executives and a senior EU official on Monday
urged the world to pull together in the face of
skyrocketing energy prices, while acknowledging
that – even if it does – costly crude is here to
stay for years.”
Stop and think about the fall out. Higher
petroleum costs will force virtually all
businesses to raise their prices, consumers will
suffer across the board, the value of the U.S.
dollar will continue to fall and, even though
energy prices are not included in the core
inflation numbers, people will know that real
inflation is going up, up and away.
Regarding utility bills, Ted Sickinger of The
Oregonian newspaper wrote, also on July first,
“Regional utilities face rapidly escalating fuel
prices and, in some cases, project wide gaps
between their power supply and customer demand.
As they purchase expensive wholesale electricity
to meet that demand, pay inflated costs to build
power plants and invest heavily to meet
renewable energy and global warming mandates,
consumers can expect an extended series of rate
increases, experts say.”
So what about the effects of utility rate
increases? Well, how about folks having less
money to spend in the future on goods and
services which will then cost them more money
because of the need for manufacturers and
service providers to pass on their increased
fuel costs to them? Pretty picture isn’t it.
The last article I referenced above is
“Double-digit declines sap investor optimism”.
In this article the reporters commented on U.S.
market activity during the first half of 2008,
“The major indexes closed out the first six
months of 2008 with double-digit declines,
leaving them perilously close to the levels of a
bear market.......The first half was the worst
for the Dow Jones industrials since 1970, when
the nation fell into a recession.”
Okay, let’s talk about what drives financial
markets – investor confidence.
When people are assured that economic conditions
are positive they invest in the conventional
markets and, conversely, when people think the
opposite they invest in precious metals and
stocks associated with companies that are in
Look what happened in the late 1970’s and early
1980’s when the prices of gold and silver soared
to unheard of highs and the prices of public
companies in these sectors did the same.
Well, I maintain that you “ain’t seen nothing
The conditions today are much more conducive to
prices appreciating in both the commodity sector
and the stock market sector than they were about
forty years ago.
Rapidly escalating oil prices, utility bills and
the declining conventional stock market are only
three examples. When you throw in additional
considerations like the housing collapse, the
huge rise in the amount of personal debt, the
escalating tensions in the Middle East and many
others, well then, the gravity of the situation
becomes quite apparent.
And, this is just the tip of the iceberg. As a
result, Mr. and Mrs. Average America are going
to become very aware of what listeners of the
Korelin Economics Report radio program have been
hearing since 1990. That is, “Stop spending
money you don’t have and protect yourself and
your families by putting a portion of your money
into gold and silver or gold and silver related
investments. For thousands of years, this is
what smart people have done in times of crisis.”
Take a listen to our radio program and hear what
our group of experts have to say on this subject
every week. If you don’t live in one of the
hundred or so markets in which the show airs,
listen on the Internet at www.kereport.com.