Raise your hand if you know who George Soros is.
You all should. And if you don’t, you really need to get in touch with the Investment World.
George Soros is arguably the most famous hedge fund manager in history, and a billionaire investor.
And in a recent interview, he had some interesting things to say about investing in Gold.
Gold has long been considered a “hedge” (or a way to protect yourself) from inflation, economic troubles, faulty plumbing, getting a bad hair cut…just about EVERYTHING.
Is there the slightest hint of economic trouble? Did job losses go up by 0.0001%? QUICK, EVERYONE RUN TO GOLD!
So it should be no surprise that Gold has been pushing record highs seemingly daily.
Gold has become an outright PANIC hedge.
The economic turbulence that we’ve all been “enjoying” has pushed gold prices to the stratosphere.
Because of this, in a recent interview, Mr. Soros has predicted that gold has formed what he calls the ultimate asset bubble.
“When interest rates are low we have conditions for asset bubbles to develop, and they are developing at the moment. The ultimate asset bubble is gold.”
So what does all this mean to you, the Trader?
Well, for starters, I’d think long and hard before you made a decision to go “long” in gold.
But should you go short right now? That in itself is a risky proposition. Just because gold has formed a “bubble”, that doesn’t mean that it won’t continue to increase, especially in the short-term. It’s entirely possible that Gold prices could push up another 20%, 30%, even more before the “bubble” bursts.
And if people really start shorting gold futures, and gold-related stocks, and the price continues to rise, this will lead to a “short squeeze”, and could force prices even higher.
So what is my advice right now? Just stay all the way away from gold, but keep your eye on it. Because once gold prices start to drop, they could plummet in a way that makes home values look like a walk in the park.
Think dot.com – type meltdowns.
That being said, gold prices coming down might not be entirely a bad thing, for two reasons.
First, as we mentioned earlier, gold is a hedge against economic issues (and everything else…like your dog getting run over).
So falling gold prices might coincide with economic recovery, or at least with increasing investor confidence in the economic outlook going forward.
Also, when a “bubble” bursts, there is great opportunities for gains for those who are ready to take advantage of them.
Take real estate for example. Right now, people are buying real estate at prices that, in many cases, haven’t been seen in 10, 15, even 20 years. These are incredible investment opportunities right now for those who are still liquid, because real estate values have become so depressed, many people believe, myself included, that they have fallen farther than seems reasonable in many places, and right now real estate has tremendous upside.
Another example would be the stock markets in general. When the “stock market bubble” burst, and the markets plummeted, panic ensued, forcing prices farther and farther down. In March 2009, it created what I’ve cleverly coined a “reverse bubble” (creative, no?)
Basically, all of the Markets were on sale. I personally purchased some Bank of America stock for the incredibly low price of just above $3 per share!
Look for gold to have the same kind of melt down – a massive sell off, causing panic, which will push prices to lows that any reasonable and “not panic driven” investor or trader will realize are ridiculously low prices.
And this will create fantastic “buying” opportunities for the investor or Trader who is ready.
So what do you need to do to put yourself in a position to take advantage of the upcoming Gold bubble burst?
First, you need to make sure you have investment capital at hand.
And second, you need to really learn day trading, really understand how to take advantage of sudden and violent movement in the Markets.
Gold is a panic hedge, and that panic button can drive the price in EITHER direction.
Before you split, take the time to share this article with your friends on Twitter and Facebook. Just hit those little buttons at the top right of this article to share, so that your friends don’t get caught with the pants down when the gold bubble bursts!
p.s. Do you subscribe to The Guerrilla Trader? Have you picked up your FREE copy of the Day Trading Success Video Boot Camp? If not, just enter your name and email address into the form below, and we’ll email you your FREE copy of this video training course!
