Prediction: The mortgage collapse/gold spike is ending soon

The deep recession we're in was caused by a lack of oversight that enabled certain parties to make quick money by selling mortgages to average people that couldn't afford them. The financing rules were structured in such a way as to bypass known patterns that would prevent under qualified borrowers from getting a mortgage that was far outside their means. And to make it worse, these bogus securities were packaged up and passed along to the global market as A+++ prime.

I wonder how our financial allies think of us now? I wonder what long term, unseen ramifications will result from this for the US in the global financial market? At a minimum I think we have lost some trust. I fear it will be much worse.

During this time, commodities that have real intrinsic value like gold, silver and platinum have spiked in value. The spike occurs because in uncertain times people want commodities that over time have proven themselves to hold their value in bad economic times. Typically, in good economic times, there is a small demand for such commodities and therefore a small supply. That is definitely where we were at in 2006, the US Mint is still trying to keep up! Prices are high for these commodities as we are in bad economic times. It's a two fold problem for the US Mint in that there is a limited supply of precious metals and an unprecedented demand for them now.

In parallel, as the value of commodities has increased, the area where most people save their money - the stock market - has tumbled. People have lost fortunes through this recession in the stock market. The stock market is currently highly undervalued in that there is a huge supply and little demand.

There is a huge supply of cheap, inexpensive, undervalued, stocks. If we look back at the last reasonably sized recession we had in the early-eighties, it's pretty easy to see what is coming if you ask me. Gold was selling for $600-800 an ounce back then. The stock market was relatively low. Gold dropped, stocks went up.

The stock market will turn around. The easy profits will be in the stock market. As a result, there will be less demand for real valued commodities like silver and gold. The value of gold and silver will drop as there is less demand and supply catches up. It's happening already believe it or not.

So what is a coin collector to do? Well, I guess if you're collecting gold solely for value, then likely its a good time to sell. If you're collecting because you simply love the coins regardless of their value, then hold on to your coins and keep buying. If you love coins and also use them as an investment, then now is probably a good time to shed some of what you have and start looking for more upcoming investments.

I think I'm in the half love coins, half love coins as an investment camp. I think now is the time to liquidate a little and buy some stocks. I look at my collection and feel like maybe I have broken the cardinal rule that says one should buy rare coins vs. buying ordinary coins to complete sets. I think I'm going to unload some really common stuff and buy stocks, not coins.

Cheers!