Friday , 21 June 2024

Eric Janszen – Part 1: Is Gold a Good Hedge? (+2K Views)

We start our journey with a review of articles recently published in Project Syndicate by two economists I respect, Nouriel Roubini and Harvard’s Martin Feldstein. Each weighed in on the topic of gold as an investment in articles. These two fine economists address the question, “Should I buy gold at a historically high price?” Feldstein approaches the question from a long-term perspective while Roubini focuses his analysis on the recent past, since 2008. Readers asked for my opinion on these articles. Parts I and II are my response.; By: Eric Janszen; Words: 401

Editor’s Note:
Part I: “Is Gold a Good Hedge?” does not warrant being edited by me and as such I provide a link to the article posted on Janszen’s own site as follows:
Part II: “The Gold Bubble and the Gold Bugs” has yet to be posted. Wait for it here or subscribe to (it’s free).
Part III: Will the year 2010 be the first in a decade that is worse for gold than for stocks? Again, wait for it here or subscribe to

Part III pours over ten years of stock and gold market data to answer the questions:
1. Whether our gold investments are down 10% or up more than 300%, should we buy more, hold, or sell?
2. What’s in store for 2010?
3. Might the year 2010 be the first since the year 2000 that gold finishes the year below its opening price?
4. What might that mean for stock and bond prices?

Taken together, the review of Feldstein’s and Roubini’s articles, and our review of the past ten years of stocks versus gold, draws us to the inescapable conclusion that:
– for the decade that began in the year 2000 the gold bug hypothesis was the right one: stocks, bonds, and real estate did, net of asset price inflation and deflation, performed worse and with higher volatility than the barbarous relic.