Occasionally I see an article written by some Guru claiming that Gold has no real investment value. They usually use points such as the fact that Gold has no cash flow or you can’t use Gold to buy goods or whatever.
All of this stuff is outright moronic. Sure Gold doesn’t have cash flow… but then again Gold also:
§ Doesn’t engage in accounting fraud.
§ Doesn’t miss quarterly earnings.
§ Isn’t affected by Obama’s health care.
§ Doesn’t lie about its real balance sheet problems.
§ Doesn’t lose market share due to stupid management practices.
§ Doesn’t perform stupid mergers or acquisitions.
§ Doesn’t waste money on buybacks.
§ Doesn’t lose profit margins to rising commodity costs.
§ Doesn’t go out of business.
§ Doesn’t have custodial risk (if you keep your bullion yourself).
§ Doesn’t pay itself ridiculous salaries and bonuses rather than increasing shareholder returns.
§ Doesn’t require a bailout or stimulus to stay in business.
§ Doesn’t commit insider trading or use Government policies to keep itself a billionaire.
§ Isn’t impacted by a slow down in the economy or consumer spending.
On top of this, when you buy Gold you:
§ Don’t get front-run by High Frequency Trading Programs.
§ Don’t get front-run by its in-house trading team.
§ Aren’t buying something that can be printed/ devalued.
§ Aren’t supporting the Big Banks.
As for the “you can’t buy assets with Gold” argument, this is a stupid double standard. You can’t buy food or anything else with stocks or bonds either. True, right now you can’t buy food or services with Gold. But will it always remain that way? Who knows? Are you NOT supposed to invest in something because you can’t take it to the supermarket?
Bottomline: Gold offers MANY advantages that neither stocks nor bonds can hold a candle to, especially in today’s environment of rampant fraud and corruption.
This is not to say I completely against owning stocks. Some companies are truly incredible investment opportunities. But blanket statements regarding entire asset class based on one or two random rules is simply idiotic. Especially when you’re talking about an asset that has risen over 400% in the last ten years.
How much have stocks or bonds rallied during that time?
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