Fundamental parameters - no. I approach gold with lack of confidence in paper wealth which can easily be created by cutting down a few trees (de-forestation is not an issue here. -g-) OTOH, gold supply is limited and it ain't easy to mint gold coins without mined gold or altering the atomic configuration of Hg, the element next to Au in the periodic table. If you can trust elected officials with their decisions and all too human central bankers whose judgment is a big suspect, by all means keep your assets in paper. I too would like convert my gold stocks paper in to greenback paper - but not before the confidence in paper is wrecked or as soon as I think I got enough of the greenbacks to satiate my greed.
The other side of confidence game is lack of confidence in one asset drives people to bid up another asset class. The concept is simple to understand but the recent reality says otherwise. I don't blame the herd for challenging the obvious. After all, I expect it (though I prefer for them to realize it as soon as I have taken my positions -g-) If everybody thought the same way or if the markets are efficient, there won't be any opportunities for independent thinkers.
BTW, for the record, I am not expecting gold to spike due to an inflationary flare-up. Rather, I am expecting it to go up because the likes of you will:
1) realize that there is no free lunch in a fiat money society and "expansion forever" is not possible.
2) realize that this is a leveraged financial system and ready to break at the blink of an eye vanishing the wealth it created at the same pace.
3) scramble for other assets on which people have more confidence - of which gold is one, IMO.
Since all of this is in future tense, I can't produce any "proof" as you normally demand. But, if you shed your new-pair-of-dimes hide (despite your denial, that's what you are) and are willing to look back in history with an open mind, you will find the answers.
One last word as I close the discussion on this topic, Greenspan or any other central banker have not found a solution to controlling mass psychology for an extended period of time. That would be the job of GOD. |
