Why are investment experts saying you need to own gold?
*Barron's, By Lauren R. Rublin and Fred Hickey, June 15, 2009:
"Down the road many of our 10 investment experts fear there will be
a bitter price to pay for today's spending, in the form of
hyperinflation and a run on the dollar. Hence, their fondness for that
great inflation hedge, gold. In the near term, alas, the only other
corrective for the debt-fueled binge of the past decade would be a
great cleansing of the economy and the markets, and that's not
something politicians -- or the folks who elect them -- want to bear."
"In the 1930s the money supply was falling even as the Federal Reserve
cut interest rates. Now not just the Fed but other central banks are
pumping money into the system like madmen. China's money supply has
grown by 25%. The money isn't going into the economy; it's going into
asset prices. Oil has doubled from a $32-a-barrel intraday low. Copper
is up 80%. Russian stocks have rallied 80%. The situation is
reminiscent of the past 14 years, when the Fed primed the pump and
created bubbles everywhere.
Recently there have been some signs the insanity might be ending: The
dollar has fallen, and yields on U.S. Treasuries have risen
dramatically. But to short assets in the next six months would be
suicidal. I haven't been short since October, even though the long-term
direction is down. How much longer will the Chinese be willing to sit
on $800 billion of Treasuries and $2 trillion of mostly dollar reserves
and watch our currency drop and our government spend $2 for every $1 it
takes in?
At the moment, the alternative might be worse.
Not printing money and letting the system cleanse itself would be very
painful. It would mean a great recession -- not something politicians
like. Therefore, the discipline will have to come from an external
source -- the Chinese. Ultimately, the dollar will collapse and we will
be forced to defend it, as happened in the 1930s. Or, we will have
horrific inflation. But we have put off the day of reckoning.
In that case, tell us what to buy in the next six months.
Buy value, and protect yourself against the threat of the dollar's
collapse and the return of inflation. I've been riding the gold wave
for a decade, and the major secular bull market in gold isn't over. I'm
twice as adamant now as in January about the need to own gold."
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.
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