Given the current economic environment, what do you see as the compelling reasons for investors to own gold?
Gold makes sense for investors as a capital preservation tool and as a capital appreciation tool. At $1900 in September 2011, the capital appreciation argument was hard to make unless you were predicating your investment decisions on the idea of a total collapse of the global financial system. We didn't see that happen. You could still have capital preservation reasons.
I think the wise investor takes some portion of his wealth and he invests in gold and silver as an insurance policy against those catastrophic financial or political events. That may be depending upon on how much wealth that person has; it may be a little or it may be a lot. We have billionaire clients who have less than 1% of their wealth in gold and silver, but it's enough for them, their children, and their grandchildren to live comfortably if things really fell apart.
Our view is that the bulk of your gold and silver investments should be predicated on the thesis that we muddle through, because that generally speaking, is what happens in the global economy. A global economy really hasn't collapsed since late 17th century. So if you look at it in a probabilistic basis, if you move away from theories and say, "Oh, all of this money creation has to be hyper inflationary." That's a theory or a belief. If you look at what's empirical evidence and if you look at probabilities, what you say is, "If I'm going to make money on gold and silver, I'm going to be buying at times when the fundamentals and the economic conditions make sense. I'm going to be pulling back from buying so much, not necessarily selling, when the economic and political environment is suggestive that precious metals might not rise so much.
Our best clients, our most successful clients, are people who have a portion of their gold and silver in a long-term catastrophic insurance program, but then they take this other gold and silver positions and platinum and palladium too and they will buy in and out of the market depending on shorter-term economic and political trends and fundamentals in the market.