Perhaps you have heard of using gold as a hedge and understand exactly what that means. Perhaps you have a hazy idea of what it means to use gold as a hedge. Less familiar than gold as a hedge is the term financial monkey. This is because I kind of made up the term “financial monkey”, but with good reason. In this blog article I will explain not only financial monkeys, but how to use gold as a hedge against financial monkeys.
Gold As A Hedge: What Does That Mean?
Imagine that you are betting $5 at work with one of the guys on tonight’s college football game. You take the Fighting Irish, because they are your team. On the way home, you hear on the radio that the quarterback for the Irish cannot play, and the second string guy will have to fill in.
When you pull up to your driveway, you see your next door neighbor in his front yard watering his azaleas. Looking to “hedge” your now less than desirable $5 bet, you take two bottles of your neighbor’s favorite beer out of the refrigerator, and head across the street. 15 minutes later you come back with a second bet in place. But this time you bet $5 against the Irish.
This way, no matter who wins or who loses, your bets have been “hedged” against each other and now you are guaranteed to win and lose but incur no costs, other than the bottle of cold beer you gave the unsuspecting neighbor, who has now assumed all of your downside risk and upside potential.
A Financial Monkey: What Does That Mean?
I used to work in restaurants. In restaurants things go wrong. Orders get mixed up. Drinks get spilled. Little fires happen, often. In essence sometimes there is a “monkey” in the wrench, and things go sideways when you least expect it. In the fine dining theatre of service however, the key is to never let the guest see the blunders; you have to hide the monkeys.
Just A Couple Of Days Ago, This Monkey In Brazil Got Drunk And Went On A Knife Wielding Rampage At A Restaurant. Local Firefighters Subdued The Drunken Monkey And Returned Him To The Nearby Forest. The Monkey Was Later Recaptured After Threatening Children. The Monkey May Have To Go To Brazilian Monkey Jail. Reportedly The Drunken Monkey Only Threatened The Male Bar Patrons. Sometimes There’s Monkeys.
Over time, you learn that things will go wrong. Blaming does not help. Yelling does not help. You simply adjust, find the best solution, and then execute that solution. Later on you can go back and try to figure out what caused the problem, fix it, and try to prevent it from happening again by instituting a monkey countermeasure.
In the financial world, which is a world where many people try to invest long term but is becoming more and more geared towards favoring instant trades and instant profits, sometimes there are monkeys. You wont see them coming. You don’t know what they are going to do.
Just This Past December A Monkey Stole A Bus And Then Crashed It Into Two Other Buses. The Primate Who Should Have Been Driving The Bus , The Bus Driver, Was Asleep In The Back Of The Bus When This All Happened. Sometimes There’s Monkeys.
All you know is that things won’t be the same after the monkey as they were before the monkey. Once you experience a financial monkey, you should begin to look for a financial monkey countermeasure; and that countermeasure is owning physical gold.
How Does Gold As A Hedge Against Financial Monkeys Work?
The most simple explanation is that physical gold in the form of gold coins or gold bars is real, and financial monkeys happen in a world where most of the money and wealth is digital and exists only in cyberspace and on hard drives. A financial monkey can move a lot of imaginary money very quickly, but that same financial monkey has a much more difficult time taking a gold bar or gold coin from inside your locked safe.
On May 6, 2010 The Dow Dropped Almost 1000 Points In Ten Minutes. Sometimes There Are Monkeys, And Sometimes There Are Really Really Big Financial Monkeys And They Really Mess Things Up.
Physical gold is real tangible wealth, and has been worldwide for thousands of years. Millionaires and Billionaires hold physical gold in their portfolios as financial insurance. Countries and central banks around the world hold gold as a means to legitimize and offset their currencies and debts respectively. People in power count on gold as a hedge against financial monkeys such as currency collapse and hyperinflation.
You see, when the imaginary markets and fiat currencies start losing their luster, things can happen very, very quickly. Billions and trillions of dollars get erased. That wealth has to go somewhere, and it often flows into the price of gold. After the 9/11 attacks, the price of an ounce of gold skyrocketed almost $100 an ounce in international trading over a mere 24 hours. Much like a teeter totter, when the imaginary stuff is down, the real monetary metals seek new all time high values.
You Can Own Gold As A Hedge Against Financial Monkeys.
ITM Trading can send gold coins and gold bars directly to your home or office. From that point, it is your responsibility to store the gold as a hedge against future financial monkeys until it becomes time to send the gold back to ITM Trading, or any other gold dealer for that matter, and realize your profits.