Gold bugs masquerading as pinstripe bankers

Mining Web ^ | 2002/06/21 Fri 12:00 | Tim Wood

[Odyssey-x]

Kind of "Interesting times" wouldn't you say. I had this idea that I would go to the library and read newspapers from 1930 and 1931 just for perspective on today's economic events.

[nickcarraway]

The only way individual investors should consider making money off gold is finding it in their backyard.

[fporretto]

The current picture is troubling, mostly because so much of America's conviction of prosperity -- the confidence that allows us to borrow and invest -- floats on a sea of faith Matthew Arnold wouldn't have dipped a toe into: the equities market.

With price-earnings ratios as high as they are, and equities prices themselves static to down in all sectors, a tide of liquid capital toward defensive bastions such as gold is to be expected. The Gary North observation, tailored only slightly to speak of equities rather than bank deposits, applies: "When a majority of investors believes that a majority of investors believes that a majority of investors will try to liquidate their positions simultaneously, then a majority of investors will try to liquidate their positions simultaneously."

No, you won't make money buying gold, not unless you're very, very lucky. But unless you're very, very unlucky, you won't lose money buying gold -- and under certain circumstances, the latter observation is more important to investors than the former. Each of us must ask whether those "certain circumstances" have arrived, and how much defense he needs to face them with equanimity.

Freedom, Wealth, and Peace,
Francis W. Porretto
Visit The Palace Of Reason: http://palaceofreason.com

[SteamshipTime]

Excellent analysis. Gold is always worth something. The government deliberately understates inflation and no one mentions what's going to happen when the cohort of Baby Boomers all start selling their 401(k)'s at once to fund their retirements.