Let me just start off by saying I am an amateur at buying and selling gold. And I am a contrarian. I think when everybody is going one way, you should be going in the other. The fact that we are not hearing ads all over the TV saying BUY GOLD, means it is probably time to buy.
Back when I had some spare cash I’d go buy gold coins or 1 ounce bars and save them in the safety deposit box. And sell them when I needed the money. Those days are gone for me as I need to focus on paying bills and not on gold.
Call it my intuition, call it the history of the market going up and down or call it what it really is, a market bubble! Everything that goes up typically comes down. And right now the market is poised for a downturn. That’s why I like gold.
The bubble that has formed in the stock market to me looks like it is going to burst, and sometime this year. Since Jan 2009 the Dow Jones Industrials have gone from 7,000 to over 20,000. That is close to a 300% gain. And it seems to relentlessly go up regardless of who is in charge, Democrat or Republican. Good news for the big corporations, stock market investors and those who have invested.
Obviously, we are not in the roaring teens and we are not in the biggest economic expansion of our lives so it is a little bit of an anomaly. And when something seems out of place, that’s when you have to worry.
If you think about it, these gains are most likely due to cost reduction (outsourcing work), automation and technology improvements, finding lower cost ways of using physical resources like land and mining and finally mergers and synergies where they lay people off and use just one accountant. Those are things that have helped big corporate entities have higher profits and get wealthier and the market shows it.
If you look carefully at this chart over the past 9 Years, it is the biggest single period of stock market gains in the history of the market. That chart below starts on Jan 1, 2009, not last year.
And history tells us that all good things come to an end, sometimes with a bang.
So, just like gravity, it can’t continue forever. So my intuition tells me that something is not right, kind of like when JP Morgan’s Driver had a stock tip for him. He knew that when his driver had a stock tip, that was the moment to sell everything, which he proceeded to do.
How Did I Hear About Bitcoin Backed Gold?
Ok, so about 6 months ago I found out about a startup based in South Florida and Australia, from an acquaintance. It was unlike no other startup I have heard of. I run pitch events so I hear a lot of startup stories. As we heard more and more about them, I wondered if it were completely the real deal, and now apparently they are. Basically OzCoinGold is offering Bitcoin Backed By Gold.
They have come up with a way to invest in gold, yet have none of the downsides of gold investing that comes with all other options. They offer a bitcoin/cryptocurrency that is backed by Gold in a mint in Australia. They apparently not only are bitcoin backed gold, but they will allow you to convert the bitcoin to gold bullion if you request it.
Commodity back Bitcoin makes total sense, like it used be in the US, when there was a Gold Standard. The US used to back every dollar with real gold at Fort Knox. That would be the ONLY bitcoin I would invest in.
OzCoinGold offers a unique type of investment that is actually, in my opinion, better than buying gold (locally) from a financial point of view. If you buy physical gold, you have to lug it around and the worst part of buying gold bars and coins is you typically pay a premium. So let’s say an ounce of gold is $1000. A local gold or coin dealer will probably charge you $1150 per ounce. That’s because he has to make a living.
The other option in the past was to buy a Gold Fund. The problem with this has always been that Gold Funds are not actually buying gold. They tend to be gold mines and mining equipment, chemicals and related stuff. And the Gold Fund does go up with Gold Going Up, but it could fluctuate based on problems in the Gold Industry and it does not float exactly with the price. So most Gold Funds are not actually gold most of the time. Sorry Vanguard, but that is what is under the hood.
And then there is buying Gold Options on the Options Market. I have played with that as well (when I had some money) and it is very risky and subject to time based losses and high fluctuations. In other words, you would have to monitor it or you will lose it. Let’s face it, who wants to be an expert at this stuff and sit in Forex all day long.
What makes OzCoinGold so unique is you can hold this bitcoin, which theoretically should float with the price of gold and yet not have to deal with the real gold itself, and the bitcoin is liquid (I think) meaning you can sell it when you need to. The premium is less of an issue (I don’t think they charge for it) and you can use the bitcoin to buy or sell stuff.
And check this out. OzCoinGold was at South By South West (SXSW,) the premier tech, music, culture conference this year where they got a lot of attention several weeks ago:
And it’s looking real and a viable option for investing. Just to be upfront, I have an affiliate deal with them, know one of the cofounders, and that is why I am also blogging about them. So, if you are interested in buying OZcoinGold this way, first make sure this is the right thing for you! Please use my link below so I get the credit if you are going to buy from OzcoinGold. If you go and buy it without clicking this link, it costs the same amount!
Just remember I am not an expert, not a broker, not a dealer, nor do I own part of this venture. I am just an average guy looking at numbers! So, just my opinion on this!
Now if you disagree with my assessment of the Dow Jones Industrial rapid growth and potential to fall, let me know. I could be totally wrong, but I could be right. Let me know.