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Why is diversifying in gold so critical for investors who hold almost all their wealth in interest rate sensitive investments?

Robert Wiedemer
May 6, 2014
Video Transcript

A lot of times, when I talk about gold, I talk about how psychology or fear drives a lot of the price, but it's more than just that. If you want to look at it from a strict sort of investment standpoint, if you were to put in this hand interest sensitive investments and this hand interest sensitive... but a positive way, that's a very easy way to divide out gold from others. I mean, bonds stocks, real estate, are all very sensitive in a negative way to higher interest rates. Gold is very sensitive positively, higher interest rates, higher inflation, it will tend to do very, very well, especially at higher inflation. So if what I'm saying in After Shock comes true, you'll get that higher inflation, you'll get those higher interest rates. These will do poorly and these will do well. It's that simple. Now, with that said, that doesn't mean that that's a requirement for gold to go up. Gold has gone up almost 300% even in a period of relatively low interest rates and low inflation. All I'm saying is that when you have a situation where you have higher interest rates and inflation, which I think you will get eventually, these will do more poorly, this will do fabulously well -- this is the gold.

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