Why Gold’s Best Days are Still to Come

What is money?

Most folks think they know.

But really, they don’t.

Money isn’t a piece of paper or plastic with the picture of the Queen on it.

Real money is one thing: a store of wealth. You can’t store wealth in paper. Not real wealth. But you can store it in gold

We’ve liked gold for years. Although, we won’t claim to be a lifelong gold bug.

In truth, we ‘found’ gold late. That’s a shame.

We didn’t start buying gold until it was around US$750 per ounce.

That’s a shame too.

While we may have ‘found’ gold late, it doesn’t bother us. Today gold trades for over US$1,300 per ounce.

But if we’re right about where gold is heading, even getting in at US$1,300 per ounce would still be a bargain.

What does that even mean?

So, why are we so big on gold?

You only have to look around. Look at what central banks and governments are doing.

Look at the low interest rates, the negative interest rates, the soaring US stock market, and sky-high government and private debt.

And, look at this image we grabbed from the Bloomberg website yesterday evening:

Source: Bloomberg

[Click to enlarge]

The caption for the video says, ‘Why Monetary Policy Needs Complimentary Fiscal Atmosphere’.

You’ll excuse us. But we have no idea what that means.

All we know is that it’s another example of busybody bureaucrats, bankers, and economists thinking that they can cure the world’s problems by spending taxpayer dollars, printing money, and crunching interest rates.

We have news for them: it ain’t gonna work.

Uh oh!

We know it won’t work, because it never works.

They can’t create wealth or value from nothing. Just printing extra money, or crediting the government’s balance sheet with extra zeros, isn’t creating wealth.

Wealth comes through effort…through work…through innovation and progress. It doesn’t come from encouraging people, businesses and government to take on huge amounts of debt.

This is why we believe in gold.

Governments can’t create gold.

Central banks can’t create gold.

Individuals can’t create gold.

Gold has value because it requires effort to produce it. Gold has value because it isn’t replicable. A central bank can’t create new gold on demand.

So when we see folks talking about things like ‘complimentary fiscal atmosphere’, (remember, we have no idea what that means) we have two thoughts.

Our first thought is, uh oh!

Our second thought is, buy some more gold.

Gold may seem expensive at US$1,300 per ounce. But the more those in power try to meddle with the economy and insist on distorting value and wealth, the more confident we are that gold will rise.

How high? That’s anyone’s guess. But at US$1,300 per ounce today, we truly believe that in itself will prove to have been extraordinarily good value five or 10 years from now.


PS: If gold goes up as much as we expect, another asset could go up further. We’re talking about gold stocks. Our old pal, Greg Canavan, has recently selected a number of gold stocks he believes are set to gain as the gold price continues to rise. For details, go here.

Money Morning is Australia’s most outspoken financial news service. Your Money Morning editorial team are not afraid to tell it like it is. From calling out politicians to taking on the housing industry, our aim is to cut through the hype and BS to help you make sense of the stories that make a difference to your wealth. Whether you agree with us or not, you’ll find our common-sense, thought provoking arguments well worth a read.

Money Morning Australia is published by Port Phillip Publishing, an independent financial publisher based in Melbourne, Australia. As an Australian financial services license holder we are subject to the regulations and laws of Corporations Act and Financial Services Act.

Money Morning Australia