Reasons to get out of stocks and hoard gold

From 2000 to present, the real price (i.e. compared with Gold) of Dow Jones is going down although the norminal Dow Jones (i.e. Dow in US dollars) may be going up. The reason more US dollars is printed to support the stock markets.

Stock trading, in real sense, is gambling. A kind of gambling based on confidence of investors in the economic outlook. And banks are the ones who provide money for these gambles.

A high Dow price, i.e. Dow/Gold ratio is caused by large credit expansions. As more and more money pours into corporations, the stocks are inflated and this results in the higher Dow/Gold ratio. However, when investor's confidence crashes, the stock markets will collapse resulting in the drop in the Dow and the soaring in Gold.

Many of us think that Gold is a commodity. It is not true. Gold is not a commodity. Gold is money. We have long live in the time of fiat money all over the world. Know ones knows and remember anything about Gold standard. In time of Gold standard, people can go to banks (any bank to change US dollars into gold without any cost or premium, yes, I repeat without any cost or premium).

But don't trade Gold, hoard (accumulate) gold instead. No one know the fluctuations of gold price. It may goes up and down at any time, but over the long run gold price is increasing and outperming all other investments.

In short, it will be your wrong decisions if you intend to invest in and keep the stocks (Dow, S&P 500) for the next 2, 3 years. Why? Because all stocks will going down. We are living in the deflationary time. Yes, we are in depression. Remember depression is a process, not an one time event. I will write another another post on this. So stay out of the stocks and hoard gold instead!