Friday, November 13, 2009

Lunatics, Malcontents, and the Narrow Minded

"After many years of direct and tangential involvement with gold markets, I believe I have a pretty good understanding of its historic role as money, as well as a speculative medium. There are many, however, including those -- maybe especially those -- involved in the world of high finance, who sniff their noses at the mere mention of the barbaric relic, relegating it to the realm of lunatics and malcontents. Yet when you think about it, to turn a blind eye to any asset class seems remarkably narrow-minded, if for no other reason than it ignores the fundamental truth that markets go up and markets go down, based upon the prevailing trade winds. There is a time for gold, just as there is a time for sugar, or stocks, or bonds. Further, to dismiss gold entirely in favor of financial assets, which most of the smart chaps tend to do, strikes me as the ultimate conceit given that so many of those financial assets are constructed out of nothing more tangible than academic theory. Simply, to believe in the latest fashionable derivative is to believe in the infallibility of humankind. I will take the other side of that trade at a snap of the fingers."

David Galland, Casey Research - November 10, 2009

"I ventured into new territory today and bought the XAU (gold/silver index). It should be another educating investment!"

Random Roving - January 17, 2002 (back in the pre-blog days)

Since 2000:
-Gold is up 285%
-S&P500 is down 20%

This cycle change has been highlighted in several prior posts about the Dow/Gold Ratio.

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