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How is gold a form of "insurance"... and can gold be a good hedge?

Eric Janszen

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Video Transcript

My view of gold is as a hedge, it's insurance, and there are a number of risks in the financial in the world economy right now, which can only effectively be hedged by buying gold. Which is not to say take all your money and put it in there, my allocation is 15%. Now since I bought it back when gold was at $250, now my allocation is now 30%, but that's ok I should probably widen my allocation, but generally I recommend somewhere between 10% and 15%, which by the way was what everyone used to recommend up until maybe 10 or 15 years ago that used to be a pretty standard financial advisor's advice to anyone, back before everyone thought that inflation had died. That's the general view today is that there is no inflation, we'll never see inflation again, all the problems of monetary management have been solved, and there's no possibility of any kind of event occurring that would cause the dollar to decline significantly and a lot of inflation. So the truth of the matter is that there's a lot of times most times are not good times to buy gold, but we at one of the times when it is because, again, there's a lot of risk in the financial markets, a lot of risk in the currency markets that are unique to our period.