Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
CHIA Coins After 1st Week of Plotting 140 Plot 14tb Farm. Crunching the Numbers How to Win - 15th May 21
Tips to Create the Best Cross-Functional Teams - 15th May 21
Gold: Lose a Battle to Win the War - 14th May 21
Are You Invested in America’s “Two-Hour Boom” Fast Shipping Stocks? - 14th May 21
Gold to Benefit from Mounting US Debt Pile - 14th May 21
6 Solid Signs You Should Have Your Smart Device Repaired Right Away - 14th May 21
Ways to Finance Your Business Growth - 14th May 21
Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
How Much CHIA Coins Profit from 100 Plot 10tb Farm? Hard Drive Space Mining - 13th May 21
Stock Market Bulls Getting Caught in the Whirlwind - 13th May 21
Legoland Windsor Mini land and Sky Train Virtual Tour in VR 360 - UK London Holidays 2021 - 13th May 21
Peak Growth and Inflation - 13th May 21
Where’s The Fed? Watch Precious Metals For Signs Of Inflation Panic - 13th May 21
Coronavius Covid-19 in Italy in August 2019! - 13th May 21
India Covid Apocalypse Heralds Catastrophe for Pakistan and Bangladesh - 13th May 21
TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
Gold Price During Hyperinflation - 12th May 21
Stock Market Extending Phase Two? - 12th May 21
Crypto 101 for new traders – ETH or BTC? - 12th May 21
Stock Market Enters Early Summer Correction Trend Forecast Time Window - 11th May 21
GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
Cathy Wood Bubble Bursts as ARK Funds CRASH! Enter into a Severe Bear Market - 11th May 21
Apply This Technique to Stop Rushing into Trades - 10th May 21
Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
CHIA Getting Started SSD Crypto Mining by Plotting and Farming on Your Hard Drives Guide - 9th May 21
Yaheetech Mesh Best Cheap Computer /. Gaming Chairs on Amazon Review - 9th May 21
Breaking US Trade Embargo with Cuba - Build 7 Computers in 14 Hours Before Ship Sales Challenge - 9th May 21
Dripcoin Applies New Technology That Provides Faster Order Execution - 9th May 21
Capital Gains Tax Hike News: Was It REALLY to Blame for Sell-off? - 7th May 21
Stock Market Transportation Index Continues To Grind Higher - 7th May 21
SPX Stock Market Correction Arriving or Not? - 7th May 21
How to Invest in an Online Casino? - 7th May 21
Gold & Silver Begin New Advancing Cycle Phase - 6th May 21
Vaccine Economic Boom and Bust - 6th May 21
USDX, Gold Miners: The Lion and the Jackals - 6th May 21
What If You Turn Off Your PC During Windows Update? Stuck on Automatic Repair Nightmare! - 6th May 21
4 Insurance Policies You Should Consider Buying - 6th May 21
Fed Taper Smoke and Mirrors - 5th May 21
Global Economic Recovery 2021 and the Dark Legacies of Smoot-Hawley - 5th May 21
Utility Stocks Continue To Rally – Sending A Warning Signal Yet? - 5th May 21
ROIMAX Trading Platform Review - 5th May 21
Gas and Electricity Price Trends so far in 2021 for the United Kingdom - 5th May 21
Crypto Bubble Mania Free Money GPU Mining With NiceHash Continues... - 4th May 21
Stock Market SPX Short-term Correction - 4th May 21
Gold & Silver Wait Their Turn to Ride the Inflationary Wave - 4th May 21
Gold Can’t Wait to Fall – Even Without USDX’s Help - 4th May 21
Stock Market Investor Psychology: Here are 2 Rare Traits Now on Display - 4th May 21
Sheffield Peoples Referendum May 6th Local Elections 2021 - Vote for Committee Decision's or Dictatorship - 4th May 21
AlphaLive Brings Out Latest Trading App for Android - 4th May 21
India Covid-19 Apocalypse Heralds Catastrophe for Pakistan & Bangladesh, Covid in Italy August 2019! - 3rd May 21
Why Ryzen PBO Overclock is Better than ALL Core Under Volting - 5950x, 5900x, 5800x, 5600x Despite Benchmarks - 3rd May 21
MMT: Medieval Monetary Theory - 3rd May 21
Magical Flowering Budgies Bird of Paradise Indoor Grape Vine Flying Fun in VR 3D 180 UK - 3rd May 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Why the Financial Gurus Are WRONG About Gold

Commodities / Gold and Silver 2021 Apr 05, 2021 - 03:27 PM GMT

By: MoneyMetals

Commodities

Longtime gold bashers are gloating over the precious metal’s recent price slump. Gold prices have declined more than 10% in the first quarter of 2021.

But the perma-bears shouldn’t feel vindicated. After all, anyone who heeded their advice missed out on gold’s record run in 2020 – and on many years of outperformance since 2001.

While gold bugs are often accused of having an unhealthy obsession with the metal, the “anti-gold” bugs reveal a deep-seated bias that can only be explained as irrational or dishonest.


Financial Advisers Don’t Get Fees Recommending Physical Gold

It’s no mystery why many who work in the financial industry hate gold. They are in the business of pushing paper assets, and physical precious metals held outside of bank and brokerage accounts generate no fees for them.

Financial professionals concoct various rationalizations for why gold is a bad investment.

They can certainly point to periods when stocks and bonds have outperformed.

Of course, no one particular asset class can be counted on to generate strong returns every single year.

The whole point of diversification into alternative asset classes including precious metals is to mitigate the risks inherent in an all-paper portfolio. These include inflation risk, interest rate risk, credit risk, counterparty risk, and even political risk.

It’s not just the opinion of bullion dealers that precious metals play a valuable role in investment asset allocation.

It’s the opinion of the respected firm Ibbotson Associates (now part of investment analytic giant Morningstar). Ibbotson found that investors who put 7.1% to 15.7% of their portfolios in precious metals enjoy superior risk-adjusted returns.

Gold shows virtually no correlation to stocks and bonds, meaning it can rise when paper assets fall. Yet the average investor has nowhere near even the bare minimum suggested by Ibbotson Associates to hedge against risks in financial assets.

Meanwhile, investors are bombarded with misinformation about gold from Big Finance and popular personal finance gurus.

Millions of people have turned to Dave Ramsey for financial guidance.

He recently stirred legal controversy by firing several employees for having premarital sex.

Clearly, he sets high standards for others. What about for his own advice?

Unfortunately, while some of his tips about managing household finances responsibly may be sound, he doesn’t seem to have a clue about sound money itself.

In a conversation posted to YouTube last year with a caller who inquired about gold, Ramsey said, “It is a golden colored rock. It has no intrinsic value except for the fact that two people are fighting over it. And that’s the only thing that gives it value – the same exact thing that gives a green piece of paper with a president’s face on it value.”

While he’s essentially correct when it comes to unbacked Federal Reserve Notes, Ramsey would have you believe that gold’s value is just as fleeting.

In fact, gold is unlike any fiat currency in that it does have intrinsic value.

Regardless of whether an ounce of gold is minted into a coin and has an arbitrary face value stamped on it, that ounce of gold possesses – and will always possess – valuable properties as a scarce, highly dense, highly conductive, highly ductile, aesthetically pleasing metal.

Gold historically has retained its purchasing power better than any paper currency ever invented. Yet Ramsey claims, “It has a crummy track record as an investment.”

He has a crummy grasp of recent history.

From 2000-2010, gold gained a cumulative 280%. But for the stock market, it was a lost decade. The S&P 500 actually fell 24% over that same period.

Incredibly, Dave Ramsey asserts on his web site, “Since the dollar isn’t backed by gold anymore, investing in this precious metal won’t help you if inflation hits.”

That statement is so nonsensical, it seems Ramsey experienced some sort of mental glitch when writing it.

The whole point of gold as investment thesis is that it serves as a hedge against an unbacked dollar! And yes, precious metals will help you over periods of rising inflation pressures.

During the decade of the 1970s, as paper assets got clobbered by inflation, gold delivered average annual returns of 30.7%. The S&P 500 barely eked out nominal gains of 1.6% per year – which were far too puny to keep pace with an inflation rate that surged into the double digits by the end of the decade.

Looking longer term, gold has risen almost 10,000% – from $20 to nearly $2,000 per ounce – since 1930, priced in America’s depreciating fiat money.

Gold Haters: Those “Living in the Past” Play with “Shiny Poo”

Despite gold’s proven track record of boosting investment returns during trying times for paper assets, the naysayers can’t seem to let go of their anti-gold animus.

Gold is tantamount to “shiny poo,” according to Big Finance.

Meanwhile, some of the “digital” bugs who are promoting Bitcoin and other cryptocurrencies also feel compelled to bash gold.

Grayscale Investments, which operates an exchange-traded Bitcoin product, went so far as to launch a “drop gold” campaign. It produced an anti-gold TV commercial than has aired frequently on CNBC. The ad portrays gold buyers as “living in the past” and out of step with the “digital world.”

Cryptocurrency enthusiast James Altucher claimed in an interview, “Gold is just a rock. Bitcoin has real value.”

There is no denying that Bitcoin has gained tremendous market value in recent years. It recently surpassed $1 trillion in total capitalization.

But barely ten years old, cryptocurrencies are much more volatile than gold and have nowhere near its historical track record of maintaining value. Bitcoin could conceivably be worthless in a few years’ time if new technologies supplant it.

Gold, on the other hand, is a basic element that can’t be digitally replicated or replaced. And it still functions without a computer or when the power goes out.

Gold has been valued and used as money for thousands of years. And central banks today are steadily accumulating gold.

Unlike a fiat currency, gold’s value can never be hyperinflated away. Unlike a bond, it can never default. And unlike a publicly traded company, it can never go bankrupt.

That’s why gold has real value.

Stefan Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2021 Stefan Gleason - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in