{"id":10539,"date":"2010-06-24T14:22:26","date_gmt":"2010-06-24T18:22:26","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=10539"},"modified":"2010-06-24T14:22:26","modified_gmt":"2010-06-24T18:22:26","slug":"if-they-dont-own-gold-dont-trust-their-opinion-on-gold","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/06\/24\/if-they-dont-own-gold-dont-trust-their-opinion-on-gold\/","title":{"rendered":"If They Don\u2019t Own Gold, Don\u2019t Trust Their Opinion on Gold"},"content":{"rendered":"<p><a href=\"http:\/\/www.taipanpublishinggroup.com\/tpg\/taipan-daily\/taipan-daily-062110.html\" target=\"_blank\">If They Don\u2019t Own Gold, Don\u2019t Trust Their Opinion on Gold<\/a><\/p>\n<p><span style=\"color: #888888;\">By Justice Litle, Editorial  Director, Taipan Publishing Group<\/span><\/p>\n<p><strong><em>As an asset class, gold stirs the passions. Some folks  love it, and others despise it. Be wary of those who will never own  gold.<\/em><\/strong><\/p>\n<p>As I write this note to you on Friday, fingers flying over keys like  the flickering quotes on my screens, Pink Floyd&#8217;s &#8220;<a title=\"Go to YouTube  video: Pink Floyd - Learning To Fly\" href=\"http:\/\/www.youtube.com\/watch?v=xb-Nacm-pKc\" target=\"_blank\">Learning to Fly<\/a>&#8221; is playing on  my speakers.<\/p>\n<p>It&#8217;s an appropriate tune, because gold is once again &#8220;learning to  fly&#8221; now. After one or two scrapped take-off attempts, the yellow  precious metal has broken out to fresh all-time highs. (Well&#8230; <em>nominal<\/em> highs at least. To break inflation-adjusted highs \u2013 which will happen  sooner or later \u2013 gold will have to trade above $2,000 per ounce.)<\/p>\n<p>Your humble editor has spilled a fair amount of ink (pixels?) on gold  these past few years. Here are a few examples:<\/p>\n<ul>\n<li><a title=\"Go to article: Why the  IMF and Fort Knox Won't Put the Hurt on  Gold\" href=\"http:\/\/www.taipanpublishinggroup.com\/taipan-daily-022409.html\" target=\"_self\">Why the IMF and Fort Knox Won&#8217;t Put the Hurt on Gold<\/a><\/li>\n<li><a title=\"Go to article: The Best Trader in the World Is Wildly Bullish on  Gold\" href=\"http:\/\/www.taipanpublishinggroup.com\/taipan-daily-110409.html\" target=\"_self\">The Best Trader in the World Is Wildly Bullish on Gold<\/a><\/li>\n<li><a title=\"Go to article: Is Gold on 'Deflationary Death Watch'\" href=\"http:\/\/www.taipanpublishinggroup.com\/taipan-daily-031309.html\" target=\"_self\">Is Gold on  &#8220;Deflationary Death Watch&#8221;?<\/a><\/li>\n<li><a title=\"Go to article: Gold Goes Parabolic as Faith in the System Erodes\" href=\"http:\/\/www.taipanpublishinggroup.com\/taipan-daily-051410.html\" target=\"_self\">Gold  Goes Parabolic as Faith in the System Erodes<\/a><\/li>\n<\/ul>\n<p>The argument for gold is nuanced, powerful and compelling. You will  find various elements of it in the archives above (should you care to  look).<\/p>\n<p>At heart, though, the case for gold is simple. After a  quarter-century of fiscal irresponsibility, we have spent all we have&#8230;  and spent yet more on top of that. Now the credit lines are nearly  tapped out.<\/p>\n<p>Against such a backdrop, in which debt levels remain high and growth  remains stubbornly low, there is little for desperate politicians to do  but print, print, print&#8230; and the only &#8220;neutral currency&#8221; not subject  to the ravages of a printing press is gold.<\/p>\n<p>If you&#8217;ve been a Taipan reader for any length of time, you already  have a fair grasp of the facts. You have probably also realized how far  we are from the financial mainstream. <em>Taipan Daily<\/em> is willing  to put things bluntly when others will not&#8230; to &#8220;tell it like it is,&#8221;  or at least tell it like we see it (with you being the final judge). <em>That  said, if you&#8217;re not a subscriber, sign up for <\/em>Taipan Daily<em> for  free, <a title=\"Sign up for Taipan Daily\" href=\"http:\/\/www.taipanpublishinggroup.com\/profit-taipan-daily-seo3.html\" target=\"_self\">right here<\/a>.<\/em><\/p>\n<p>And so, with that in mind, a quiet suggestion: <strong>If they don&#8217;t  own gold, don&#8217;t trust their opinion on gold. <\/strong><\/p>\n<div>\n<div>\n<blockquote><p><strong>Veteran Trading Expert Reveals Controversial New  \u201cPowerSignal\u201d \u2013 Vows to Help You Turn $5,000 Into $1.2 million! <\/strong><\/p>\n<p>After generating 8,527% total gains in a legally documented  \u201cbeta-test\u201d\u2026 veteran trading guru Adam Lass is ready to help you get  very, very rich.<\/p>\n<p><strong>Follow this link for all the details on <a title=\"Learn more about Taipan's VIP Circle\" href=\"https:\/\/orders.taipanpublishinggroup.com\/TPV\/WTPVL605\/\" target=\"_blank\">WaveStrength PowerSignal<\/a>.<\/strong><\/p><\/blockquote>\n<\/div>\n<\/div>\n<h3><strong>Pomp and Nonsense<\/strong><\/h3>\n<p>Why does this need to be said? Because gold is an emotional precious  metal. As an asset class, it stirs the passions. Some folks love gold,  and others irrationally despise it. Either way, investing and trading  decisions tinged with emotion are not to be trusted.<\/p>\n<p>As gold has marched steadily higher, an amazing amount of hand-waving  and pooh-poohing has taken place&#8230; most of it from individuals who  have never owned gold in their lives and likely never will.<\/p>\n<p>(If gold is too high priced for these dismissive souls now, at a  measly twelve hundred bucks and change, how on earth will they bring  themselves to buy in at $2,000&#8230; or $4,000&#8230; or higher still?)<\/p>\n<p>In many ways, gold is despised because its ascendancy is an affront  to an established way of life. A rising gold price means the system is  not working. It means the old &#8220;buy the dips&#8221; mentality, in which the  same old fiscal fixes continue to work, has gone by the wayside.  Relentlessly rising gold means the easy way of life established these  past 25 years \u2013 a &#8220;simpler time&#8221; that many money managers wish they  could return to \u2013 has gone the way of the dodo.<\/p>\n<p>So we hear over and over how gold is a &#8220;barbarous relic.&#8221; (Funny \u2013 no  one calls the Federal Reserve system a relic, though they&#8217;ve been  consistently screwing things up since 1913.)<\/p>\n<p>We also hear from sour-grapes types and knee-jerk attention seekers  that gold is just a fad&#8230; that the infatuation will die down any time  now.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" title=\"Chart: Gold Index\" src=\"http:\/\/www.taipanpublishinggroup.com\/images\/web\/taipandaily\/gold-continuous-contract-621.jpg\" border=\"0\" alt=\"Chart: Gold Index\" width=\"442\" height=\"295\" \/><\/p>\n<p>But these viewpoints are rooted in emotion, not facts. The newspaper  columnist who turns his nose up at gold is not merely dismissing an  asset class. He is expressing discomfort at the pressing onset of a  strange reality he does not understand.<\/p>\n<p>Meanwhile, the market &#8220;contrarians&#8221; who bellow about gold going lower  \u2013 even as it marches ever higher on daily, weekly and monthly charts \u2013  are merely grasping for straws of attention, trying to restore old guru  glories lost.<\/p>\n<h3><strong>A Cheap Insurance Policy <\/strong><\/h3>\n<p>There is something else important the naysayers and doubters fail to  understand: <em>Gold is a low-cost insurance policy. <\/em><\/p>\n<p>Ask yourself the following. How much faith do you have in the Federal  Reserve? How about the Bank of England (BOE), the European Central Bank  (ECB), or the Bank of Japan (BOJ)?<\/p>\n<p>Our financial and political leaders have not just performed poorly in  a time of serious crisis, they have performed spectacularly badly.  These past few years have been the fiscal version of the BP oil spill.  Who is to say the powers that be won&#8217;t bungle things worse \u2013 much, much  worse \u2013 when the full-blown &#8220;Act II&#8221; of the global financial crisis hits  with full force?<\/p>\n<p>Against the backdrop of breathtaking financial, social and  geopolitical risks the whole world faces now, the truly crazy stance (in  your humble editor&#8217;s opinion) is <em>not<\/em> owning gold. Those who  blithely assume everything will work out are like Florida beachfront  property owners, happy to forego insurance as the hurricane bears down.<\/p>\n<div>\n<div>\n<blockquote><p><strong>Have You Heard of \u201cpShares\u201d?<\/strong><\/p>\n<p>Not only could \u201cpShares\u201d hand you the payday of a lifetime with an  initial stake of just a couple hundred bucks\u2026 but they\u2019re also  subsidized by the U.S. government.<\/p>\n<p><strong>Learn how to stake your claim for as much as an 808% return  on these <a title=\"Learn more about New Growth Investor\" href=\"https:\/\/orders.taipanpublishinggroup.com\/TAI\/WTAIL315\/\" target=\"_blank\">government-sponsored  options<\/a>.<\/strong><\/p><\/blockquote>\n<\/div>\n<\/div>\n<h3><strong>Last Train<\/strong><\/h3>\n<p>The other open question in respect to gold is one of supply and  demand. Some feel there is more than enough gold to go round at current  levels. How can gold be worth such an exorbitant price, these critics  whine, when all it does is sit there?<\/p>\n<p>Others, like credit and debt strategist <a title=\"Go to First Things  Blog\" href=\"http:\/\/www.firstthings.com\/masthead\" target=\"_blank\">David P. Goldman<\/a>, take a different view:<\/p>\n<p><em>What&#8217;s the price of the last ticket  on the last train out of Paris on the night the Germans march in?  Whoever is carrying the most cash will get it, and that will be the  price.<\/em><\/p>\n<p><em>&#8230;Central banks alone own about 4.8  million tons of gold. The world produces about 2,200 tons. Suppose that  central banks wished to increase their gold holdings by 1 percent.  That&#8217;s 48,000 tons or so, or more than 20 times annual mining  production.<\/em><\/p>\n<p><em>What&#8217;s the price elasticity on that  sort of thing? How badly do you need that ticket out of Paris?<\/em><\/p>\n<p>Speaking of central banks&#8230; &#8220;Last year, foreign central banks were  net buyers of gold for the first time since 1997,&#8221; CNN reports. &#8220;India,  China and Russia have been the biggest buyers. And more recently, the  Philippines and Kazakhstan jumped into the fray with big purchases of  the precious metal during the first quarter&#8230;&#8221;<\/p>\n<p>There are at least three different motives for owning gold \u2013 as  speculation, as investment and as long-term insurance policy.  Speculation is the motive most sensitive to price changes, insurance the  least.<\/p>\n<p>Whatever your motives and methods, your humble editor would advise  considering gold not just as a standalone asset, but in the context of  other potentially risky assets you own&#8230; like the fiat  currency-denominated cash in your portfolio, for example.<\/p>\n<p>And when seeking opinions on what gold means and where gold is going,  be wary of those who don&#8217;t own it (and who never will).<\/p>\n<p>Don&#8217;t forget to follow us on <a title=\"Become a fan of Taipan Publishing Group on Facebook\" href=\"http:\/\/www.facebook.com\/pages\/Baltimore-MD\/Taipan-Publishing-Group\/220337511074\" target=\"_blank\">Facebook<\/a> and <a title=\"Follow Taipan_Trader on Twitter\" href=\"http:\/\/twitter.com\/taipan_trader\" target=\"_blank\">Twitter<\/a> for the latest in  financial market news, investment commentary and exclusive special  promotions.<\/p>\n<p><em><strong>About the Author:<\/strong><\/em><\/p>\n<p>Justice Litle is the Editorial Director of Taipan Publishing Group,      Editor of <a title=\"Learn  more  about Justice Litle's Macro Trader\" href=\"https:\/\/orders.taipanpublishinggroup.com\/JMT\/WJMTKC19\/\" target=\"_blank\"><em>Justice  Litle\u2019s Macro Trader<\/em><\/a> and    Managing  Editor to the free investing  and trading e-letter <a title=\"Sign up  for Taipan Daily\" href=\"http:\/\/www.taipanpublishinggroup.com\/profit-taipan-daily-seo.html\" target=\"_blank\"> <em>Taipan Daily<\/em><\/a>. Justice  began his   career   by pursuing a Ph.D. in literature and philosophy at  Oxford    University  in England, and continued his education at Pulacki     University in  Olomouc, Czech Republic, and Macquarie University in     Sydney,  Australia.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>As gold has marched steadily higher, an amazing amount of hand-waving and pooh-poohing has taken place&#8230; most of it from individuals who have never owned gold in their lives and likely never will&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-10539","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/10539","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=10539"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/10539\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=10539"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=10539"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=10539"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}