This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Europe Makes It Easy to Buy Gold

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.
Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free

Markets

Chart of I:DJI
DOW 17,662.84 -88.07 -0.50%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Our Tweets

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs