"Gold has no use," a fellow speaker told the crowd Thursday
night. "Our firm doesn't recommend gold. It has no industrial use. We
can't value it."
I laughed to myself...
We were at a meeting for about 100 local businesspeople. And while the
asset manager talked about how useless gold is, I thought, My readers haven't worried about gold's industrial uses... They've simply pocketed hundreds of percent profits
I've been telling my readers to buy gold since 2002. I've gotten
them into gold coins and gold stocks – including my biggest winner, Seabridge Gold
(for a 995% gain).
This asset manager on the stage has probably told his customers
"gold has no industrial use" for a decade. He probably told them to buy
and hold stocks instead. In that decade, gold has soared from $300 an
ounce to $1,400. Meanwhile, stocks have lost money.
There was one other speaker there... He was from a mainstream bank.
And he agreed with the other guy. He added, "Our firm recommends you
have up to 8% of your financial assets in alternative assets, including
hedge funds and commodities."
Then this speaker proudly explained how he talks his customers out of gold...
"Whenever a customer expresses an interest in gold, we try to
figure out why... Because there are much better things you can own in
every case. If they're afraid of inflation, for example, I show them
that stocks do better than gold in inflation."
I just kept my mouth shut.
If these guys have had their heads in the sand for 10 years, nothing I could say would change that.
Look, I know the bear case for gold. I know it doesn't pay
dividends or grow like a company. I know it doesn't pay interest like a
government bond. I know it's not useful for industry. And I know it's
more cumbersome than a debit card when you just want to buy a gallon of
milk. I know it's not a true inflation hedge. I know, I know, I know.
But one more thing became clear to me after hearing these "mainstream" asset managers...
Gold is still a "fringe" asset. Clearly, it makes bankers cringe.
Not only do they not recommend it, they talk their customers out of it.
I didn't realize mainstream bankers and asset managers still had such a distaste for gold. To me, this means gold still has plenty of room to run.
Gold can certainly have a severe correction from here. But "big money" investors
(and governments like China
and India) now view gold as another form of currency – a store of
value. That means the sky is the limit for the price of gold, whether it
has any industrial use or not!
Is the price of gold at "nosebleed" heights? Yes, based on history.
But if gold is now being thought of as the new alternative
currency, it could still go much higher. And as long as mainstream
bankers hold it with such disdain, it can keep going up.
Don't sell your gold at these prices... The mainstream still doesn't own gold. Astoundingly, it's still not "popular" yet.
So sit tight... Corrections will surely happen. While the price of gold might seem high today, there are higher highs ahead.
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