Tuesday, November 03, 2009

Gold

Who says no vehicle for investment and savings has not earned a killer 12 month return? Gold is up nearly 50%.

Reasons
1. Lack of faith in all fiat currencies.
2. Primary reserve currency, the US dollar, is called into question.
3. People are nervous and know that gold can always buy something.
4. No trust that government spending will slow down, which debases the currency.
5. More avenues of access like the Gold-Silver ETFs available.
6. Foreign Central Banks purchasing gold en masse (India bought 200 tonnes from the IMF).
7. People have just been burnt by stocks for the 2nd time in 10 years and need an outlet.
8. Banks have not been fixed in any meaningful way. Think about it: there was a stress test that checked them out and gave them the 'all clear'. No fixing or breaking up. When you don't trust the health of giant banks, you're going to stuff dollars under the bed. When you don't trust dollars, you'll turn to gold.

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