Does rise of gold really mean edge against inflation ?

H

harrytrader

In Conclusion of The History of Gold
by Martin A. Armstrong
© Princeton Economic Institute
08/01/94


"In [...] overview of financial history, one striking common theme arises from the trials and tribulations of man - gold rises NOT as a hedge against mere inflation, but as a hedge against the UNSOUND PRACTICES OF GOVERNMENT and/or POLITICAL UNCERTAINTY. Steady rising inflation DOES NOT act as an underlying support mechanism for gold. Its role within the modern investment strategy is a hedge against political and economic uncertainty. Gold has always risen the MOST when the confidence in the government is at its LOWEST!

The illustration of gold's rise in the face of declining confidence in government is endless. The hoarding of gold was so severe during the Great Depression that Roosevelt ended up outlawing the private ownership of gold and confiscated everything the government could find. Quite a drastic police state tactic. Nevertheless, it did happen here in the United States!"
 
Buffet since 1998 is looking to buy gold for the first time in 35 years. But one cannot follow Buffet since he is a very long term investor hee hee ! Nevertheless it's a sign. Same kind of sign when Bill gates began to sell Microsoft massively.

The problem is that many people when signs will be truly there will precipate to buy Gold but it will be paper Gold and so risk to be worthless. Even true Gold if Government decide to confiscate like he has done won't protect. So ...

People who has known war really know the value of Gold in crisis. Others will believe the official fairy tale that Gold is no more an exchange refuge. If it wasn't so the cycle of Gold wouldn't be in antisymetry with stock market.

Quote from harrytrader:

In Conclusion of The History of Gold
by Martin A. Armstrong
© Princeton Economic Institute
08/01/94


"In [...] overview of financial history, one striking common theme arises from the trials and tribulations of man - gold rises NOT as a hedge against mere inflation, but as a hedge against the UNSOUND PRACTICES OF GOVERNMENT and/or POLITICAL UNCERTAINTY. Steady rising inflation DOES NOT act as an underlying support mechanism for gold. Its role within the modern investment strategy is a hedge against political and economic uncertainty. Gold has always risen the MOST when the confidence in the government is at its LOWEST!

The illustration of gold's rise in the face of declining confidence in government is endless. The hoarding of gold was so severe during the Great Depression that Roosevelt ended up outlawing the private ownership of gold and confiscated everything the government could find. Quite a drastic police state tactic. Nevertheless, it did happen here in the United States!"
More...
 
Despite the popular belief that gold is no longer a hedge against US inflation and a falling dollar, the charts tell all. Looking back on the dailys its very clear that many have found shelter there. I myself swing a couple of gold stocks, and was able to profit from nice trends while the SOX, and IIH went into narrow ranges late '01 and '02. It would be very interesting to see how the new gold futures trade. Great post harrytrader.


Quote from harrytrader:

In Conclusion of The History of Gold
by Martin A. Armstrong
© Princeton Economic Institute
08/01/94


"In [...] overview of financial history, one striking common theme arises from the trials and tribulations of man - gold rises NOT as a hedge against mere inflation, but as a hedge against the UNSOUND PRACTICES OF GOVERNMENT and/or POLITICAL UNCERTAINTY. Steady rising inflation DOES NOT act as an underlying support mechanism for gold. Its role within the modern investment strategy is a hedge against political and economic uncertainty. Gold has always risen the MOST when the confidence in the government is at its LOWEST!

The illustration of gold's rise in the face of declining confidence in government is endless. The hoarding of gold was so severe during the Great Depression that Roosevelt ended up outlawing the private ownership of gold and confiscated everything the government could find. Quite a drastic police state tactic. Nevertheless, it did happen here in the United States!"
More...
 
I think gold is an excellent hedge against greenspan and his merry band of meddlers.

When they are forced to induce massive inflation that turns the dollar to confetti, you will want hard assets. You can buy real estate (asset bubble) or artwork (illiquid), or pokemon cards (fad). Or you can simply buy the 2 most liquid assets: Gold and Silver.

I own CEF for that purpose, now that the NAV premium is livable, and have significant positions in a half dozen other gold producers. It not only helps me sleep much better, but it has been very profitable to own them over the past few years.
 
Quote from praetorian2:

I think gold is an excellent hedge against greenspan and his merry band of meddlers.

When they are forced to induce massive inflation that turns the dollar to confetti, you will want hard assets. You can buy real estate (asset bubble) or artwork (illiquid), or pokemon cards (fad). Or you can simply buy the 2 most liquid assets: Gold and Silver.

I own CEF for that purpose, now that the NAV premium is livable, and have significant positions in a half dozen other gold producers. It not only helps me sleep much better, but it has been very profitable to own them over the past few years.
More...
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Harrytrader;
Yes and NEM , most better gold stocks have been trending up nicely last couple of years.

Gold stocks probably won't outperform tek stocks this year; unless we see a gold spike like in the 1980s.

Might miss some gold stock dividends ;
might sell into such a spike & buy back lower.

NEM , others doubled in that spike in about a month, if i remember chart correctly;
setttled back down quickly , might repeat that pattern.


:cool:

''The streets are paved with gold''
 
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