I was series six licensed as a stock and mutual fund salesman with John Hancock in the late 80's and saw the huge leap to invest in Gold at that time.
One of the key things I had a hard time understanding was how our Stock and Security Analyst would tell us that Gold is not a Bull Market Commodity (market going up) but a Bear product protection hedge. In other words it would not appreciate compared to high risk stock portfolios.
It took a old Stock Broker in L.A. years later to help me understand that thinking process. We were having lunch at a swanky limited partnership sale for a third round funding of the over budget Superman movie (I think it was Superman III but I was just there to watch the process). This man took out a Gold Coin and a Dollar Bill and pointed at the Dollar Bill and asked, "how is that valued?". My response was, "by the Federal Reserve I guess."
He nodded, "close enough, but if I say this dollar bill is only worth fifty cents in trade for that spoon you have, how do you stop me?"
I shrugged and replied, "I guess it depends how badly I want to sell the spoon."
He nodded again and stated something that finally made Gold value make sense.
"A ounce of gold will buy you the same suite you have on today, as it will tomorrow, as it would have a hundred years ago, as it will a hundred years from now. But that dollar bill it has gone from a $10 suite in 1870 to a $360 suite in 1990. Gold does not go UP...the Dollar goes DOWN in how much it can buy. So you don't increase your money with gold, you preserve your ability to buy the same thing today as you will a hundred years from now."
Now that's after the speculators have stopped messing with the actual value. Gold will always settle in at the price it will buy that suit for today, as tomorrow as next year.
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So what kind of path is our dollar on?
You'd have to be blind and deaf not to see where the current administration is taking the dollar.
Where does that leave us?
GOLD is stable
GOLD is tradable world wide
GOLD is not under the control of one government
GOLD may not go UP in value as a investment but it will not go DOWN in value whereas a $100,000 in the bank may only buy $30,000 worth of food tomorrow.
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So the trust factor in Gold is good so long as we are investing in it as part of our overall plan to adapt to the circumstances around us.
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