Saturday , 15 June 2024

Is Gold a "Gotta-Have" Investment? Some Don't Think So

Watch Out If You Believe Gold is a Safe “no-lose, gotta-have” Investment!

There’s a saying in the investment business that when the taxi driver and the delivery person are talking about a “no-lose, gotta-have” investment, it’s time to run for the exits. At that point of maximum adoration and comfort, the masses have gone wild and that’s often the warning that the smart money is on its way to the exits and the novices will be trampled in the exodus. Think technology stock bubble in 2000, or house flipping three years ago. Now, think gold. Words: 538

So said Gail Marksjarvis in an article* in The Chicago Tribune a year ago and the sentiment of the present day is still unchanged. Lorimer Wilson, editor of, has further edited ([  ]), abridged (…) and reformatted her comments below for the sake of clarity and brevity to ensure a fast and easy read. (Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.) Marksjarvis went on to say:

Some Cautionary Comments About the Price of Gold

Serious investors always worry when too many regular people start pouring money into a single investment without an inkling about what might drive the price up or down. They’ve simply heard that gold is safe and climbing fast. How can you pass up the magic word “safe” and big profits on an investment?

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Goldman Sachs Group‘s precious metals team… [have] said that if U.S. interest rates stay low it will be conducive to gold prices [continuing to] climb but if the economy strengthens and the Federal Reserve raises rates, “gold prices will come under significant pressure” as investors look for better returns elsewhere, such as Treasurys. [That risk is still in place today.]

Jim Paulsen, chief investment strategist for Wells Capital Management, has maintained that the frenzy [regarding gold] has led to a lack of clarity about what’s driving gold prices. “Gold has been the answer to inflation; gold has been the answer to disinflation; gold has been the answer to too much debt and to the China bubble,” he said, “but I have never known an asset that was the answer to everything.”

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[Paulsen pointed out that] between 1980 and [mid-2008] gold  traded at 1 to 2.5 times the CRB Commodity Index which tracks a broad range of commodities [the ratio continues to climb….up from 3.8 at year-end 2008…to 3.9 at year-end 2009…to 4.0 in March 2010…to 4.27 at year-end 2010…and here in March 2011 it remains above 4.o] and, as such, maintained then that gold was overpriced, and consequently vulnerable to fall. That anomaly remains today. That being said, please read this article providing a list of over 100 analysts who are of the opinion that gold will surpass $2,500 soon and this article providing rationale as to why gold might even exceed $10,000!]


Buyer beware and watch out if you believe gold is a safe “no-lose, gotta-have” investment!


Editor’s Note:

  • The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
  • Permission to reprint in whole or in part is gladly granted, provided full credit is given as per paragraph 2 above.
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  1. GOVERNMENT Sachs (GS), warning about gold! HA!HA!HA! T-H-E most corrupt publicly traded company (The Fed is the most corrupt “private” company) tells us to be careful about gold!! Geez, did someone from JPM write the warning for them? They can pound salt. Can’t wait until the serve up the first scapegoat (Madoff like).

  2. Does this article represent your view, or are you just posting it in the interest of full disclosure?

    IMHO, gold will not turn negative until the Federal Government ceases their systematic currency debasement. I have seen no actions whatsoever on the part of the government that tells me gold will stop going up.

    We are in a demographics-related secular bear market which will continue for many years. There will be no real return in stocks or bonds for perhaps the next 10-15 years, so the money flows and will continue to flow to gold.

  3. WRT everyone getting into gold (and silver), I’ll get worried when I need more than one hand to name all the people I know that have gold exposure.
    Last I checked 1% exposure to precious metals in most portfolio’s isn’t “regular people pouring money into a single investment”