SOTB
"Buying and holding gold & gold stocks did neither..."
Gold stocks...OK, but physical, no.
An analogy to your premise goes like this:
"Martha here's the annual $1000 premium due on our life insurance and we've been wasting money year after year, lets cancel"
"Thats right Joe, 90 years of $1000 a year, compounded in the bank, and we'd have had a nice nest egg, we should cancel"
(replace life insurance with disability insurance, car insurance)
Actually many gold investors are happy that their gold investment isn't up. Because that means they still have their job, they still have their house, and the financial system is functioning smoothly. Everyone is 'long work', 'long life'...AND long 'this financial system'.
Gold is a way to short 'this financial system' and remain long life. Gold was, is, and always has been the way to build this long term paired trade.
If you are long Pesos, you're still 'long this financial system'. This financial system, like life, has no guarantees.
Gold is the investment many have for the day when the financial system breaks, and there will be no warning. You wake up one morning, banking holiday. Talk to anyone from Argentina in their crisis. If you had gold, US dollars the morning of the holiday, your family was fine.
So, your 20-20 rearview approach is fine from a trading perspective, but you missed one point. Most investors in bullion don't sell, perhaps one year in ten. The reason they don't sell is that noone in the general population is getting a 'heads up' on a banking holiday, or capital controls, or a dual currency, or a domestic and international exchange rate.
"Insurance is supposed to both pay YOU for your loss,
and offer YOU protection against loss."
Dont make the mistake of looking for the loss in your rearview mirror while you step on the gas and go hurtling headforward into the loss at high speed. For now, the banking system still works, most people have their jobs and their houses.
No loss.
-D
PS
Germany with its Weimar republic experience...most would agree its the best gauge of whether this 'loss' is potentially in our future
"The Bundesbank has said that gold reserves are more important than before and has rejected calls that it should sell some of its gold reserves to help boost the slowing German economy. The Bundesbank said that financial and political uncertainty make the reserves even more important than before. The Bundesbank is the world's second-largest holder of gold after the US Federal Reserve, and has sold just 20 tonnes out of total reserves of over 3,000 tonnes in the past five years."
"Gold sales are not a suitable way to sustainably consolidate the public accounts," the Bundesbank said after a query about trade union proposals that it sell gold to fund some of a 25 billion euro ($37 billion) economic stimulus package. "National gold reserves have a confidence and stability-building function for the single currency in a monetary union. This function has become even more important given the geopolitical situation and the risks present in financial market developments."
fxstreet.com
Mexican Pesos?? Knock yourself out!! |
