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Why Would You Ever Want To Own Gold?
mrearlygold
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Why Would You Ever Want To Own Gold?
Bill Bonner
Stocks up another 53 points on the Dow yesterday. Gold down another $5.
The Dow is above its 14,000 peak; gold is below $1,600/oz.
I'll come back to this in a minute. First...
Even a seasoned traveler can make remarkably dumb mistakes. That's why we are writing to you from Baltimore rather than from Beijing. For the second time in a single week, we got to Dulles International Airport yesterday and discovered that we lacked the proper visa for travel to China. We had forgotten that you need a visa at all.
You don't always go where you intend to go, but you always end up where you ought to be. Why ought we be in Baltimore? We don't know. But here we are.
Getting Out of Gold
Even seasoned investors make mistakes too. And now they seem to be selling gold. Yes, dear reader, our favorite metal is taking a beating. Gold has dropped below $1,600/oz to trade at $1,594/oz at writing. The best investors are said to be abandoning their yellow metal for more "productive" positions. From Bloomberg:
Billionaire investors George Soros and Louis Moore Bacon cut their stakes in exchange-traded products backed by gold last quarter as futures dropped the most in more than eight years. John Paulson maintained his holding.
The fourth-quarter decisions by Soros and Bacon may bolster speculation that gold's 12-year bull run is coming to an end as economic data from the U.S. to China show signs of recovery, curbing haven demand.
Soros Fund Management LLC reduced its investment in the SPDR Gold Trust, the biggest fund backed by the metal, by 55% to 600,000 shares as of Dec. 31 from three months earlier, a U.S. Securities and Exchange Commission filing showed yesterday. Bacon's Moore Capital Management LP sold its entire stake in the SPDR fund and lowered holdings in the Sprott Physical Gold Trust. Paulson & Co., the largest investor in SPDR, kept its stake at 21.8 million shares.
And under the headline "Gold Sinks Through $1,600 on Recovery Hopes," the Financial Times adds:
Gold prices tumbled... for the first time in six months as investors turned to other assets amid hopes of an economic recovery.
Recovery? The U.S., eurozone and Japanese economies are all (according to the most recent quarterly results) shrinking, not growing. What kind of a recovery is this?
Nevertheless, mainstream opinion believes this is no time to cower in the safety of cash... or gold. Take chances. Buy stocks! Look at Buffett. He's teamed up with a Brazilian tycoon; they're paying $28 billion for a ketchup company.
Dumb and Lifeless
Well, what do you think? Are they right?
Why would you ever want to hold gold, anyway? It is dumb and lifeless. It issues no upbeat press releases. It never "beats analysts' estimates." It doesn't come out with a slick new handheld device... or announce a major acquisition.
None of the good news you hope to get from an investment ever comes from gold. No matter how much you own, it doesn't seem to care about you; it makes no effort whatever to increase shareholder value.
Instead, it just sits there... like an old umbrella next to the front door, only useful when it rains. War? Gold goes up. Market crash? Gold goes up. Inflation? Gold goes up.
End of the world? Who knows, maybe gold would go up too.
So, you decide. What's ahead? Good news? Or bad news? Will the 100 leading economists be right... or wrong? Fair weather... or foul?
It's impossible to say. So, we hedge our bets. We own some real investments – stocks, bonds, real estate – and hope the 100 leading economists know what they are talking about.
And we hold on to our gold too... in case they turn out to be the numbskulls they usually are.
Why would you ever want to own gold?
Bill Bonner
Stocks up another 53 points on the Dow yesterday. Gold down another $5.
The Dow is above its 14,000 peak; gold is below $1,600/oz.
I'll come back to this in a minute. First...
Even a seasoned traveler can make remarkably dumb mistakes. That's why we are writing to you from Baltimore rather than from Beijing. For the second time in a single week, we got to Dulles International Airport yesterday and discovered that we lacked the proper visa for travel to China. We had forgotten that you need a visa at all.
You don't always go where you intend to go, but you always end up where you ought to be. Why ought we be in Baltimore? We don't know. But here we are.
Getting Out of Gold
Even seasoned investors make mistakes too. And now they seem to be selling gold. Yes, dear reader, our favorite metal is taking a beating. Gold has dropped below $1,600/oz to trade at $1,594/oz at writing. The best investors are said to be abandoning their yellow metal for more "productive" positions. From Bloomberg:
Billionaire investors George Soros and Louis Moore Bacon cut their stakes in exchange-traded products backed by gold last quarter as futures dropped the most in more than eight years. John Paulson maintained his holding.
The fourth-quarter decisions by Soros and Bacon may bolster speculation that gold's 12-year bull run is coming to an end as economic data from the U.S. to China show signs of recovery, curbing haven demand.
Soros Fund Management LLC reduced its investment in the SPDR Gold Trust, the biggest fund backed by the metal, by 55% to 600,000 shares as of Dec. 31 from three months earlier, a U.S. Securities and Exchange Commission filing showed yesterday. Bacon's Moore Capital Management LP sold its entire stake in the SPDR fund and lowered holdings in the Sprott Physical Gold Trust. Paulson & Co., the largest investor in SPDR, kept its stake at 21.8 million shares.
And under the headline "Gold Sinks Through $1,600 on Recovery Hopes," the Financial Times adds:
Gold prices tumbled... for the first time in six months as investors turned to other assets amid hopes of an economic recovery.
Recovery? The U.S., eurozone and Japanese economies are all (according to the most recent quarterly results) shrinking, not growing. What kind of a recovery is this?
Nevertheless, mainstream opinion believes this is no time to cower in the safety of cash... or gold. Take chances. Buy stocks! Look at Buffett. He's teamed up with a Brazilian tycoon; they're paying $28 billion for a ketchup company.
Dumb and Lifeless
Well, what do you think? Are they right?
Why would you ever want to hold gold, anyway? It is dumb and lifeless. It issues no upbeat press releases. It never "beats analysts' estimates." It doesn't come out with a slick new handheld device... or announce a major acquisition.
None of the good news you hope to get from an investment ever comes from gold. No matter how much you own, it doesn't seem to care about you; it makes no effort whatever to increase shareholder value.
Instead, it just sits there... like an old umbrella next to the front door, only useful when it rains. War? Gold goes up. Market crash? Gold goes up. Inflation? Gold goes up.
End of the world? Who knows, maybe gold would go up too.
So, you decide. What's ahead? Good news? Or bad news? Will the 100 leading economists be right... or wrong? Fair weather... or foul?
It's impossible to say. So, we hedge our bets. We own some real investments – stocks, bonds, real estate – and hope the 100 leading economists know what they are talking about.
And we hold on to our gold too... in case they turn out to be the numbskulls they usually are.
Why would you ever want to own gold?
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
0
Comments
Current US and world monetary policy is sure-fire inflation
No counter-party risk
History as money/store of value
<< <i>At the moment there aren't any better alternatives
>>
real estate? ( just playing devils advocate )
Coin's for sale/trade.
Tom Pilitowski
US Rare Coin Investments
800-624-1870
<< <i>
<< <i>At the moment there aren't any better alternatives
>>
real estate? ( just playing devils advocate ) >>
Possibly, in some locations at least and assuming you have knowledge in that area of investing.
I prefer the liquidity and portability of PMs vs the upkeep costs/illiquidity/recurring taxes of real estate. Not to mention I know next to nothing about the real estate market!
<< <i>
<< <i>At the moment there aren't any better alternatives
>>
real estate? ( just playing devils advocate ) >>
At the distressed real estate firm I work for, we have been getting investors double digit returns in our fund for the past few years...
There are various ways to make money, there is no right or wrong. There will always be alternatives and other opportunities that make money.
Thanks for the story OP
BST Transactions (as the seller): Collectall, GRANDAM, epcjimi1, wondercoin, jmski52, wheathoarder, jay1187, jdsueu, grote15, airplanenut, bigole
value and gold content. Looking at the
long term !!!
<< <i>
<< <i>At the moment there aren't any better alternatives
>>
real estate? ( just playing devils advocate ) >>
People need jobs to make house payments, no matter how low the interest rate. Until employment improves, housing sales are dominated by speculators and mover-uppers. Note that the mover-upper leaves another one on the market. I personally don't think housing has found its bottom.
Give Me Liberty or Give Me Debt
<< <i>I personally don't think housing has found its bottom. >>
With govt manipulation in the R/E mkt by forcing banks to hold back supply, it has found a false bottom. Once banks have a grasp on what they have and they can foreclose properly (see states like NV with the Bill 284 passed... yikes), we wont have a firm bottom. Pricing has started to rise in most areas as supply is smaller than demand (the key is that supply is artificially low). Simple economics
BST Transactions (as the seller): Collectall, GRANDAM, epcjimi1, wondercoin, jmski52, wheathoarder, jay1187, jdsueu, grote15, airplanenut, bigole
When I was a young boy my mom made me eat everything on my plate, even if I didn't like it. When I bought a shop almost 4 years ago, gold was $900 per ounce. It eventually graduated to $1900 and has since declined to it's current level. Platinum has done much goofier things. I remember one particular company that was there and now they're gone. I lost EVERY dime I had into them. I cannot say the same for gold. It's not crashing and burning and when it drops to low enough levels , it just picks up more people who are finally convinced that it carries value, even if it's not a "Good investment" all the time.
Just sayin' my peace. Don't shoot the reject.
As to jobs, that's another story. Our infrastructure is in dire need of rebuilding, the world over .. in every metropolis.
Gold doesn't care about milking your investment or churning your account. It takes no fees and doesn't need to pay employees or utility bills in order to stay in business. What it does do is to store value for its owner, and it doesn't care much about that either. It doesn't have any ulterior motives. Sounds good to me.
I knew it would happen.