petersl

The 'Death of Gold' Revisited

The major flaw in the reasoning of this writer is to largely ignore the role of the vast dollar decline, not just against other currencies, but against the things that people around the globe use every day. This list includes, not necessarily in order of importance, oil, food, metals, building materials and all sorts of tangible goods, that people require for their standard of living. As the peoples of the undeveloped but rapidly developing world seek a better life, these things will command a premium. To the contrary, financial assets like shares of Citigroup, Countrywide Financial, the whole array of derivative investment paper, is not as appetizing to consume. This whole trend is absent from the writer's analysis. I agree that gold and other precious metals are in a temporary decline, but if you examine the charts from the mid 1970's until the present, you can readily see that the dollar index has convincingly broken through the 80 level to the downside, and the better view is that this is not a temporary phenomenon, as much as general consensus would have you believe otherwise. For those who are interested in learning more about the role of secular bull markets in commodities, one could profit handsomely from a thorough reading of Jm Rogers' "Hot Commodities," which though an unfortunate choice of words for a title, has demonsrated over the past two years, Rogers' prescience.

Gold's New All-Time High

And if "investing in commodities is a loser's game" then I suppose an investor ought to load up on stock in such current "stalwarts" as Bear Stearns, Citigroup, Countrywide Financial ("Country Fried"), Washington Mutual, etc. and ride the financial bull market?