Gold in the Next Calendar Year

We’re not getting any older. Or, are we?

Yes, dear reader, it is all coming together…and falling apart.

First, this is a quiet time in the markets. The Dow barely moved yesterday. Gold, however, fell $10 to close under $1,600.

You know the drill. Sell stocks on rallies. Buy gold on dips. This formula has worked beautifully for the last 12 years. We don’t see any reason to give it up. Has anything important changed? Is there a new man at the Fed who is determined to save the dollar and the bond market? Has Congress suddenly decided to stop spending more than it takes in?

If so, we haven’t heard about it.

And so what if gold falls to 1,400? Or 1,200? You know what we call that. A buying opportunity!

But a lot of people don’t agree with us — thank God. They think gold has made its big move. They think we’re back in 1980…looking ahead to another big bull market in stocks and another big bear market in gold.

Not that there aren’t similarities. Let’s see…similarities…hmmm…hmmm…

Oh yes. The Fed chief then and the Fed chief now both walk on two legs!

But seriously, as Warren Buffett says, if you’re in a poker game and you can’t identify the patsy, you’re it. These people who see parallels between 1980 and 2011…who expect a recovery…and a boom…they must be the patsies.

If they’re not, we are. They are buying stocks and selling gold. We’re doing the opposite.

But you know something, dear reader… You know what we really think…? We consulted the Mayan calendar. It began on August 11, 3014 BC. And it ends…you guessed it…in 2012. And you know what that means? We can stop putting on seat belts. And stop worrying about M-2. Or M-1. Or any other M.

We mean, what’s the point…with the end of time coming and all?

And we can stop taking those nutritional supplements. Instead, we’re going to have an extra drink. What harm can it do? After all, if the Mayans are right, we’re not getting any older.

By the way…we’ve all heard of how Mayer Amschel Rothschild built his banking empire. What we don’t hear much about is how his wife, Gutle, did the hard work — preparing her children for the challenge ahead. We know now that any fool can run a bank…it’s almost a job requirement. But not any woman can build a team of children who are capable of running a banking empire.

Gutle outlived her husband. Despite the family’s great wealth, she lived all her life in the same tiny house in the Frankfurt Judengasse (Jewish alley) where she and Mayer had started out.

When she was in her 90s she consulted a doctor.

“What do you expect,” he said to her. “I can’t make you any younger.”

“You misunderstand, Herr Doctor,” she replied. “I want to be older.”

We think gold has further to fall. We also think bonds have further to rise. And we think this Japan-like slump has further to run.

Here’s something interesting. We have been predicting that the US would “turn Japanese” for nearly 10 years. Maybe more. Many were — and are — the parallels between the US and Japan. But one thing that never seemed to line up was the population trend. The Japanese are getting older…and fewer. Americans are still relatively young…and the population is still growing.

But wait. What’s this? The latest census data tells us that immigration in the US has fallen to a 20-year low…and population growth has slowed to 0.7% per year — the lowest level since before the Baby Boom generation was born.

Maybe we are turning Japanese after all.


Bill Bonner
for The Daily Reckoning