Let me start by saying that although I have a number of gold bugs as clients and I love gold bugs, I'm not one myself. As I've indicated, I'm just an economist looking at the broad picture. From that perspective, gold is probably the single best asset to help people ride out the storm, based on what we're facing, and I would contend that there's been an increasing view from that perspective in the global investment community over the last decade.
I hadn't realized it until I was putting together some year-end numbers and noticed that every year since 2004, gold has outperformed the Dow Jones Industrial Average in each year. I'm not talking a cumulative number, but year-to-year. We've certainly seen a lot of volatility in gold prices, but gold hasn't had a negative year, while the Dow was down 33% in 2008. Wall Street pooh-poohs gold as a fringe investment, but its performance suggests quite the contrary. It's one of the historical world-class assets, and over the millennia has been fairly consistent in terms of preserving purchasing power.
JW: It is. Insurance against a financial Armageddon. Gold's over $1,400 an ounce as we speak. When it gets up to $5,000 people will say, "Oh my goodness. I bought it at $1,400. I can sell it at $5,000 and make a lot of money." That profit may be there, but the way to look at gold is that it anticipates the inflation ahead and preserves the purchasing power of your paper assets. Even if gold gets to $100,000, it's not that you've made $98,600 profit, it's just that you still have the purchasing power you did with your $1,400 gold.
Source: 24hgold.com
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