Gold News

Reckless Gold Investment

When did Wall Street "market" gold...?

IS IT the end for the bull market in gold? asks Daily Reckoning founder Bill Bonner.

Everybody says so. Here's The New York Times:

'...in Pocatello, Idaho, the tiny golden treasure of Jon Norstog has dwindled, too. A $29,000 investment that Mr Norstog made in 2011 is now worth about $17,000, a loss of 42 percent.

'"I thought if worst came to worst and the government brought down the world economy, I would still have something that was worth something," Mr Norstog, 67, says of his foray into gold.

'Gold, pride of Croesus and store of wealth since time immemorial, has turned out to be a very bad investment of late. A mere two years after its price raced to a nominal high, gold is sinking — fast. Its price has fallen 17 percent since late 2011. Wednesday was another bad day for gold: the price of bullion dropped $28 to $1,558 an ounce.'

And this was before gold tumbled on Friday.

We can barely stop laughing.

This sad sack 'investor' thought he would make money by putting $29,000 into gold stocks.

Ha ha ha...wrong on all counts. He thought gold was an 'investment'... he thought an amateur speculator could make money in gold stocks... and The New York Times thought he was an investor.

And now, The New York Times thinks gold is going down. Why? Let's let the NYT tell us:

'Now, things are looking up for the economy and, as a result, down for gold. On top of that, concern that the loose monetary policy at Federal Reserve might set off inflation — a prospect that drove investors to gold — have so far proved to be unfounded.

'And so Wall Street is growing increasingly bearish on gold, an investment that banks and others had deftly marketed to the masses only a few years ago,'

Ha ha...do you remember Wall Street deftly marketing gold a few years ago? Show us the ads! Give us the brokers' phone logs! Prove it!

The fact is, the masses never got anywhere near gold. Not even close. Most people have never seen a gold coin... and few are as reckless as the aforementioned Mr Norstog. Most are even more reckless! They'll wait for gold to hit $2,000... or $3,000 before they buy.

Which is why we think we're nowhere close to the top. Wall Street never marketed gold, deftly...or any other way. Not even in its usual greedy, heavy handed fashion. And the masses never bought it.

Just the opposite. As the price of gold rose, we saw ads in the paper soliciting people to SELL gold. The masses held gold parties... in which they sold their golden heirlooms at preposterously low prices.

And about those reports telling us that money printing by central banks would cause trouble...they have 'so far proven unfounded'. Well stay tuned!

And get this. More good news:

'On Wednesday, Goldman Sachs became the latest big bank to predict further declines, forecasting that the price of gold would sink to $1,390 within a year, down 11 percent from where it traded on Wednesday. Société Générale of France last week issued a report titled, "The End of the Gold Era," which said the price should fall to $1,375 by the end of the year and could keep falling for years.'

Why good news? Because the more bearish on gold Wall Street becomes, the more the rubes and pumpkins sell. The more they sell...the cheaper it is for the smart money to buy.

Yes, dear reader, we hope Goldman and SocGen are right. We'd like to see the gold price crash down lower.

First, because this would mark a real correction in the bull market. It's been going on for 12 years without a serious correction. Not a healthy situation. We'd like to get the correction out of the way...shaking out the Johnnies-come-lately and the two-bit speculators. Then, the final stage in the bull market could begin.

Second, because it gives us a chance to buy more. Because no matter what noise you hear in the press or in the street, central bankers are far more reckless than Mr Norstog.

The monetary authorities are convinced that they can revive sluggish economies by printing money...and they'll continue printing until all Hell breaks loose.

Then, when the dust settles...when pounds, Pesos, Yen, Euros and Dollars have all been beaten and bruised...there will be one money still standing tall. That will be gold.

Bill Bonner has co-authored a number of New York Times Bestsellers including Financial Reckoning Day, Empire of Debt and Mobs, Markets and Messiahs. In his own opinion, Bill's most recent title, A Modest Theory of Civilization: Win-Win or Lose, is his best work yet. Bill also founded The Agora, a worldwide community for private researchers and publishers, in 1979. Financial analysts within the group have exposed and predicted some of the world's biggest shifts since that time, starting with the fall of the Soviet Union back in the late 1980s, to the collapse of the Dot Com (2000) and then mortgage finance (2008) bubbles, and more recently the election of President Trump.

See full archive of Bill Bonner articles

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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