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Eric Sprott: Gold Is the Go-To Asset in Any Environment

SW Richmond, all very true, but nothing the government can do will increase the purchasing power of your gold. All they can do is decrease the purchasing power of the dollars they print. That makes the dollar a losing investment (it also happens to have no yield now as well, so it's not really an investment either) but it has nothing to do with gold. Gold will be a huge *relative* winner over dollars, pounds, euros, yen, etc. It will be an even bigger *relative* winner over bonds denominated in fiat paper. But in absolute terms, it's likely to do what it's always done: not much. Right now, that's just fine. But it's nothing to get excited about. The only way to make money with gold is actually by shorting the paper currencies against it. In other words, you have to make a big leveraged bet. Just owning gold won't yield much if any real profit.

Eric Sprott: Gold Is the Go-To Asset in Any Environment

A "go-to asset" in any environment? Wow, sounds like a miracle drug that cures everything from eczema to pancreatic cancer. Sort of makes you wonder why anyone would own anything else, ever.

In fact gold is money, no more and no less. When investing doesn't make sense, you keep most of your assets in gold because it will not lose purchasing power. But most of the time, investing does make sense. Keeping gold lying around is a good idea in any environment, but usually only to reduce risk. Never forget that you cannot turn a profit on gold, as it generates no income. The real long-term wins always come from real investments, and the huge short-term wins always come from big leveraged bets.

Telling people that gold is a "go-to asset" under any circumstances is ridiculous. In fact it's the asset of last resort; when you don't think anything else will work, you sit in gold, earning nothing. Don't get me wrong, I own a lot of gold myself. But I'm not deceiving myself into believing that it's an investment. I wish I could get rid of most of it, but there isn't anywhere I want to make big investments right now. The combination of poor economic outlook and ultra-low interest rates makes most investments not worth the risk, so gold it is. But don't think I'm happy about it.