A minor rant, major cents. GOLD is not an alternative asset class to anything but CASH. Simon, the reason equities and property have been the best performing asset classes over our lifetimes is because the nature of money changed forever in 1973. During the Vietnam war, Nixon abolished the Gold Standard to stave off US bankruptcy, with no need to credibly control how wealth was translated to currency, he opened the way for money to be `created'. All that money found a home in the organization, equities, property and money markets. The whole system almost seemed credible... Now. The cracks are showing. Sub-Prime is not over, it was nearly a symptom of the something systemic - the corruption of the monetary system. And this gross offence is only 35 yrs old, the breaking of the 3000yr relationship between currency and gold is in its infancy in the context of our history as civilized men. Now, no major currency is immune from rapid inflation and sudden exchange rate devaluation. Not any more, not since they broke the link with Gold. Zimbabwe 24000% inflation?! How? Before: (x unit of currency A) = (1 oz of gold) = (y unit of currency B). Simple. Each Central Bank declared their gold holdings (after settling their forex for Gold with the relevant CB) and declared how much of their money was in supply. We worked out that ratio and compared that to `that other currencies' ratio - and `voila' we knew the currency exchange rate. Gold stabilized EVERYTHING. Now its all about `perceived' value in currency, we perceive the risks: Health Epidemics, Rising inflation, Xenophobia, Electricity Crisis, Global inflation, pending political change... THEN, we `price' the currency. Its a farce. All the while, central banks printing presses continue to print print print - and the banks lend, leverage, lend. The man on the street who speculates wisely wins, those that are actually productive members of society lose. GOLD is the only credible store of movable wealth. Not the mining house, not the specialist UnitTrust, not the ETF, but the metal. Why not invest in the ETF? 1. It is listed and therefore subject to speculative risk. 2. It needs to be reduced to Rands. Just like your pension fund. What are those Rands going to be worth in 15 yrs? In 3 yrs? Hold the bullion, dont speculate with GOLD. Store the VALUE. If the time should come when it's time to liquidate (IF ever?!), you want to be in a position to choose the conversion currency of your choice, especially with the growing erraticism of world politics and 'perception'. Accumulate the Bullion. In SA we have the KrugerRand, only 6 countries worldwide mint 24oz bullion coins. The are accepte d globally as they have been since the Greeks first minted the Gold Drachma 3000 yrs ago. The problem with bullion is the liquidity costs. Roughly 15% above the London fix going in and a further 10% on the way out. If anyone is interested in finding out more information on how to procure gold bullion from what I believe to be the lowest cost supplier of physical gold in SA you can email me at
[email protected]
... View more