With gold trading near the $1,800 level, King World News was given exclusive distribution rights for this rare and extraordinary piece with fifteen graphs by superstar John Hathaway of Tocqueville Asset Management L.P.. John is without question one of the most respected institutional minds in the world today regarding gold and his fund was recently awarded a coveted 5-star rating by Morningstar.
Few would dispute that the twelve year (and still counting) bull market in gold has been the
opportunity of this investment lifetime. Even fewer have participated. From its 20 year bear
market low in August of 1999, bullion has appreciated more than seven fold. That works out to a$US compound return of 18.0% compared to 0.7% for the S&P 500. There is a paltry $2 trillionof investment gold, approximately 1% of global financial assets. It is not main stream. It is notwidely held. The rationale for investing is antithetical to mainstream thinking. The opportunityhas been missed by almost every conceivable category of investor including pension funds,endowments, mutual funds, and central banks, all of whom could be safely described asunderweight the metal, overweight dicey financial assets. Despite the headlines, gold remains under owned.
To regard the lengthy bull market in gold as an isolated fact would be simplistic and superficial.
The media and most of the financial community are captivated by daily price action, but see
nothing more. To most, it is a speculation, probably an overcrowded trade, and maybe a bubble. It is seen in the narrowest of terms, as an odd curiosity that will at some point just go away.
Gold’s advance is but one aspect of a much bigger picture. The collapse of the dot com and
housing bubbles, the 2008 credit collapse, the eleven year bear market in stocks, sovereign debtwoes in Europe, zero interest rates, intractable sovereign fiscal deficits, and, yes, the steady rise of gold in all currencies are rooted in the breakdown of confidence in paper currencies linked only to political agendas.
Since the demotion of gold to non-monetary status by the Nixon administration in 1970, fiat
money and credit based upon it have been a fundamental source of global wealth generation.
What is the value in real terms of the $200 trillion of wealth denominated in currency if nobody wants the paper?
In golf parlance, a “mulligan” is a second chance to make good on a bad tee shot. Mulligans are
routinely granted and gratefully accepted by every golfer at the beginning of a friendly match,
after a bad first shot. In the world of investing, second chances, or “do overs” are not routine.
Sideline huggers who have missed the bull market of a lifetime must “pay up” if they wish to
participate in a long-established trend. Late to the party entry points are inherently more risky, as the sharp correction in bullion during the last week of August in bullion illustrates...
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