it's kind of hilarious hearing arguments against gold these days being touted as contrarian. being against gold is as American Apple Pie as being against Osama.
i say don't fight the Fed. if they want to make the dollar into confetti, what's to stop 'em. gold is the only defense against confiscation of savings held in a fiat currency, as Greenspan himself liked to point out back in his youth. Ayn Rand must have given him some strange ideas!
i could understand it if somebody made a contrarian argument against gold back in the late 70s when it was headed to 800 an ounce. but back then, nobody trusted American confetti. as Faber points out in his latest letter, in the early 80s, short-term rates had high real yields, and nobody wanted 15% long bonds when you could get 20% CDs. that's extreme distrust of confetti. it must have seemed like high inflation would go on forever.
but nowadays, short-term rates are negative in real terms, and everybody plows into 10yrs with a low 3-handle because they can't bear the idea of 1% or less on the money markets. everybody i know who's doing a refi prefers an ARM instead of locking in a multigenerational low rate on a 30yr fixed. it must seem like inflation and high rates can never happen again. in other words, everybody trusts confetti today. extreme hypertrust, it seems, with all the money pouring into bond funds in the blowoff top of the bond bubble. (incidentally, Faber makes an interesting argument that inflation would have ended even if Volcker hadn't raised rates.)
a vote for gold is a vote against greenspan. it is a vote against confetti, and today that is an unpopular vote. it's like wearing a polyester shirt and a leisure shirt. still totally dorkish, but give it five years. these days, all fashions are recycled. |
