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Politics : Welcome to Slider's Dugout
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To: paul ross who wrote (10870)7/19/2008 11:26:02 AM
From: patron_anejo_por_favor  Read Replies (1) of 50541
 
Good piece. Gold is a hedge against failing alternative investment classes, up to and including the financial system at large. Primarily because it doesn't represent an obligation by any counterparties. Stocks? An obligation from current management to manage the business prudently (including not robbing the company blind and overpaying managers). Bonds? The obligation to maintain cash flows to make interest payments and return principle at the end. Real estate? No obligations if owned outright....but with investment RE you've got obligations from tenants to make payments, obligation from government to keep taxes stable and provide promised services. Obligation from yer neighbors they won't build a biker bar next door. You get the picture.

Other commodities share most of these characteristics, but are often lacking in one or more ways. Oil? Not portable and too closely tied to economic cycles.

It used to be said (not just by gold bugs) that everyone should hold 5-10% of their portfolio in gold. That was before the hugely disinflationary period that ended in 2001, that 20 year period beat that truism out of financial planning dogma. But it's time has come again to shine.

Be Bold, Stay Sold. Got Gold?
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