‘Gold Bugs’: Does Investing in Gold Make You Paranoid or an Economic Realist?
[Author’s note: the following is a cross-post that originally appeared on Wall St. Cheat Sheet]
Quality questions create a quality life. Successful people ask better questions, and as a result, they get better answers.”-Tony Robbins
Gold bugs are often made out to be doom and gloom nervous nellies that camp out somewhere deep in the wilderness. Uncivilized and irrational, they count their lifeless and barbaric stacks of gold and silver bullion, along with cans of baked beans. All while wishing for the entire collapse of the financial system and ushering in a Mad Max world.
But, is this view really true? Are gold bugs just realists in today’s economy? The answer is obvious to anyone paying attention to the global debt crisis unfolding before our eyes.
Contrary to some pundits, the majority of individuals who hold precious metals are not merely pessimists, but rather people trying to take responsibility for their own financial well-being. In fact, gold bugs have one of the most optimistic spokespersons on their side of the coin. Tony Robbins is one of the world’s most recognizable motivational speakers. He was ranked among the “Top 50 Business Intellectuals in the World” by Accenture’s Institute for Strategic Change, and considered to be one of the “Top 200 Business Gurus” by Harvard Business School. He also believes that “the meeting of preparation with opportunity generates the offspring we call luck.”
Naturally, he is bullish on gold.
Robbins recently warned about the risk of fiat currency devaluation and discussed the opportunities in gold, which is “exploding” and “in a bull market,” according to GoldCore. The firm also reported the following:
[Robbins] spoke about investment experts who he respects and specifically mentioned Marc Faber and Kyle Bass … Faber and Bass are extremely bearish on paper currencies and government debt, and are very bullish on gold and silver bullion due to the eurozone debt crisis and looming global debt crisis due to the appalling fiscal state of Japan, the UK and the US.
Faber is a Swiss investor who famously advised his clients to exit the stock market one week before the 1987 crash. Most recently, he called U.S. Treasuries the biggest bubble ever and says the odds for a global recession is 100 percent. Meanwhile, Bass is the founder of hedge fund Hayman Capital and successfully predicted the meltdown in subprime mortgages.
[Related: Patience Pays with Gold and Silver]
Gold is more than just a hedge against economic uncertainties, it is insurance against the actions of governments and central bankers around the world. Bass once eloquently explained, “Buying gold is just buying a put against the idiocy of the political cycle.” The global financial system is now facing massive debt loads and gold investors are simply taking notice, preparing for the opportunities that tomorrow will bring because, after all, the sun will still rise tomorrow. Instead of being viewed as pessimists, gold investors should be seen as realists.
Money isn’t everything, but it sure helps. If people are unable to access their money, it will be extremely difficult to take advantage of any opportunities that market turmoil may provide. The people located in the eurozone are quickly realizing this hard truth … countries are beginning to introduce capital controls in order to maintain the status quo of fiat currencies for as long as possible.
Last week, it was reported that Bank Network Investments in Italy froze all customer accounts for one month. Furthermore, Reuters recently announced that European finance officials have discussed limiting the size of withdrawals from ATM machines and implementing border checks.
In a world of debt loads and stimulus programs in the multi-trillions, placing all your eggs in one currency like the dollar or euro appears to be a dangerous decision to protecting your financial well-being. Unlike paper currencies, gold and silver bullion do not carry counter-party risk that can make it difficult or impossible to access your capital and build a brighter tomorrow.
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