The Europeans make some decisions simple and easy, a decision like whether to buy gold or not.
For most of the last five months, since gold peaked in October, the precious metal has been only a so-so place to be. The SPDR Gold Shares (GLD), the ETF I like to recommend for those who want exposure to gold, peaked in October at $174 and has been trending down ever since selling off to as low as $151 a month ago.
Until this week it seemed like gold, which has been a monster performer for more than a decade, had finally lost its luster. The drift down looked to be the beginning of something larger and the collapse of the gold stocks en masse seemed to be forecasting the halcyon days of the GLD were over. The great multiyear bull market, alas, was ending.
This article originally appeared on March 19, 2013, on RealMoney. To read more content like this + see inside Jim Cramer's $3 Million portfolio for FREE Click Here NOW.And then the Europeans stepped in to stem the decline with the absolute dumbest, most bone-headed plan I have ever seen to tax the depositors, the small-time depositors, of a poor country that is inundated with hot money, perhaps hot laundered money from the oligarchs of Russia. That's right, the Europeans with the help of the IMF reminded you just how stupid the concept of the euro is and how it is untenable both to own the euro and now to keep it in a European bank. Their moronic plan for Cyprus gave you a super reason to go right back into gold. Now, before I tell you how I think you are getting still one more fantastic chance to buy the precious metal, let me just say that I don't want to fall prey to the notion that what should happen will happen. I think that if I had money in a European bank I would just say "to heck with it, I am going to put it in an American bank. Who the heck needs this worry?" I would particularly feel that way if I were wealthy and had the ability to wire the money with a keystroke to JPMorgan Chase (JPM), where I have my money now, even with all of the revelations -- revelations, I should add, that were actually brought to light by JPMorgan itself. It's just so easy to do that I can't believe any wealthy person stays in those banks. You can kill two birds with one stone, if you want to, swapping out of euros into dollars while you get the protection of the FDIC and the balance sheet of JPM, or Wells Fargo (WFC), U.S. Bancorp (USB) or whichever one you want. They are all in much better shape than even the strongest European bank. But I don't know if I want to be in the dollar long term given our own lack of frugality and inability to do anything intelligent with our budget deficit. So the logical default currency is gold. We had a lull in European problems for a bit but through a lack of regulation -- how else did Cyprus get so out of hand, especially after the same thing happened in Iceland -- that lull is over. But I think that this is just one more reminder that rich people will switch from keeping euros in banks to keeping gold in deposit boxes. That's why I am urging you, if you own no gold or not GLD personally, to buy some now. Sure, most Europeans may keep their money in the bank. They live there. That's kind of their lot in life. But the wealthy? They are going to look to pull their money out over time. The beneficiary? Gold. Amazingly, the regulators just can't help themselves. They make buying gold the easiest decision in the world because of their incredible incompetence. They are the gift that clinches the gold buy every single time they take action, and this action may be the best action since the reign of that total buffoon, former ECB chief Jean "Fraud" Trichet.
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