by
Bill Bonner Recently by Bill Bonner: Did These Hidden Forces 'Elect' the President?
Stocks up another 53 points on the Dow yesterday. Gold down another $5. The Dow is above its 14,000 peak; gold is below $1,600/oz. I'll come back to this in a minute. First... Even a seasoned traveler can make remarkably dumb mistakes. That's why we are writing to you from Baltimore rather than from Beijing. For the second time in a single week, we got to Dulles International Airport yesterday and discovered that we lacked the proper visa for travel to China. We had forgotten that you need a visa at all. You don't always go where you intend to go, but you always end up where you ought to be. Why ought we be in Baltimore? We don't know. But here we are. Getting Out of Gold Even seasoned investors make mistakes too. And now they seem to be selling gold. Yes, dear reader, our favorite metal is taking a beating. Gold has dropped below $1,600/oz to trade at $1,594/oz at writing. The best investors are said to be abandoning their yellow metal for more "productive" positions. From Bloomberg:
And under the headline "Gold Sinks Through $1,600 on Recovery Hopes," the Financial Times adds:
Recovery? The U.S., eurozone and Japanese economies are all (according to the most recent quarterly results) shrinking, not growing. What kind of a recovery is this? Nevertheless, mainstream opinion believes this is no time to cower in the safety of cash... or gold. Take chances. Buy stocks! Look at Buffett. He's teamed up with a Brazilian tycoon; they're paying $28 billion for a ketchup company. Dumb and Lifeless Well, what do you think? Are they right? Why would you ever want to hold gold, anyway? It is dumb and lifeless. It issues no upbeat press releases. It never "beats analysts' estimates." It doesn't come out with a slick new handheld device... or announce a major acquisition. None of the good news you hope to get from an investment ever comes from gold. No matter how much you own, it doesn't seem to care about you; it makes no effort whatever to increase shareholder value. Instead, it just sits there... like an old umbrella next to the front door, only useful when it rains. War? Gold goes up. Market crash? Gold goes up. Inflation? Gold goes up. End of the world? Who knows, maybe gold would go up too. So, you decide. What's ahead? Good news? Or bad news? Will the 100 leading economists be right... or wrong? Fair weather... or foul? It's impossible to say. So, we hedge our bets. We own some real investments – stocks, bonds, real estate – and hope the 100 leading economists know what they are talking about. And we hold on to our gold too... in case they turn out to be the numbskulls they usually are. February 22, 2013 Bill Bonner is a New York Times bestselling author and founder of Agora, one of the largest independent financial publishers in the world. If you would like to read more of Bill’s essays, sign-up for his free daily e-letter at Bill Bonner’s Diary of a Rogue Economist. Copyright © 2013 Bill Bonner
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