The Currency for Uncertainty

Chuck Butler (August 10, 2010)

…and the Only One that Protects You in Both Up and Down Markets

Let’s get something straight; I’m a “currency guy.” And there’s good reason for that.

I’ve been in the markets for a long time — over four decades — and it’s pretty safe to say that I’ve seen darn near everything. And when it comes to the strategy that has worked consistently and made the most people some of the easiest returns – it’s the currency crowd that keeps coming back for more.

My Currency Capitalist subscribers already know exactly how foreign currencies can juice up their stock portfolios or IRAs.But when it comes to making money with, well, money, it still amazes me how many other investors seem to overlook the world’s oldest currency when they’re building their currency portfolio.

For one, this currency has never fallen to zero unlike nearly every other currency. Also, there’s only a limited supply of this currency on the planet. It can’t be printed, easily manipulated, or inflated.

That’s why it’s the ONLY currency that can protect you in BOTH stock bull and bear markets.

Figured it out yet?

Naturally, I’m talking about my favorite long-term currency: gold.

The Currency of Hard Times

So why is gold considered a currency?

Well to determine that, you need to think about what a “currency” really is. It’s not just some cash in the bank or some folded dollars in your pocket.

To go “back to basics” for just a moment, a currency is defined as “a medium of exchange or store of value.”

Now, you can’t walk into a grocery store and buy your weekly dinners with a few gold Eagle coins or a bar of bullion. So, that means it doesn’t hold water as a medium of exchange.

But in the markets, gold is treated as a store of value. It’s the form of cash you want to hold when markets are falling apart, when fear is overtaking the markets.

That’s why during every great bear market, gold still manages to hold its value.

In fact, even during the worst of the stock sell-off in 2008, gold remained relatively flat. You know why? It was because the big-name investors out there used their gold as a currency – and they sold it off to tidy up their books.

In other words, it was the only thing they had left of value so they hocked it.

What’s Up Next For My Favorite Currency

Even though gold prospers in both deflation and inflation, there are moments when it soars just a bit higher depending on what’s happening in the markets.

This autumn may prove gold’s worth once more.

As I told my Currency Capitalist subscribers earlier this month, I definitely believe that we’re in for a double-dip recession this fall. All the signs are there:

1. Seasonal Weakness for Stocks: You can’t ignore that September and October usually mean gloom-and-doom for global shares.

2. Unemployment Still Miserable: According to Friday’s numbers, our unemployment is stuck at 9.5% (and as I always tell my readers – that’s an “underestimate” at best, the real number is in the double-digits). Also, the Non-Farm Payrolls just showed that we lost 131,000 jobs in the past month. The economy simply can’t recover if unemployment doesn’t.

3. Housing Market Slowly Coming Undone: Nobody wants to admit it but the housing market is in shambles. Homes are sitting unsold. Foreclosures are still piling up (even on big mansions in California). The tax credits that forced home sales are now gone. Looks like the exact same market that caused this recession in the first place could tip us into the double-dip recession.

A double-dip recession would spook investors once again and spark another “flight to safety” in the markets. That means investors may again start diving for what they consider to be valuable in these hard times.

Where will they turn?

Frankly, my money is on gold. The shiny metal could soar even higher – could hit $1,500 by next year.

At the very least, gold will still hold its own as stocks sell off.

Make sure you’re adding to your portfolios on dips to be sure you’re ready for whatever comes next. It’s time for you to get sold on gold!

In the meantime, have a Terrific Tuesday!

Chuck Butler, Editor
Currency Capitalist

P.S. Gold is actually part of a much-bigger profit story. And my colleague Eric Roseman has 8 more reasons investors should be flocking to the safety of commodities right now.

Across the board, oil, grains, alternative energy and more are undervalued and Eric’s 8 Profit Triggers tell him exactly what you should be buying up now at a discount.

Click here now to download our free video on how to time commodities investments. Plus find out how you can get 2 months of his signature research and winning picks in Commodity Trend Alert … absolutely free.

Tags: Currency