I love gold. I love its history. I love the role it’s had in many a monetary system. I love the beauty of gold. I love the versatile uses of gold.
I love gold coins. I love objects made of gold. I love gold’s role in new technologies.
But gold is not the be-all end-all of the investment world. Nor is it the world’s savior. It is not even a very good hedge against inflation.
The hate mail will pour in again. I’m sure of it. But I have my reasons for giving you the truth, and nothing but the truth about gold. As despised as I’ll be for the facts I give you today, you need to know the truth.
There are too many myths and propaganda out there about gold, and if you get caught up in them, you most assuredly will lose the shirt off your back investing in gold.
The fact of the matter is that the chief reason promoted to invest in gold — inflation — is dead wrong.
Consider the following:
– At the depths of the depression in 1929, an ounce of gold sold for $20. The Dow Industrials was at 40.
An ounce of gold today is roughly $1,196. It’s increased 59.8 times over.
But the Dow Industrials stands at roughly 18,000. That’s 450 times more than it was in 1929.
And that means that since 1930, the Dow has outperformed gold 7.52 times over.
– In 1980, gold sold for $850 an ounce. The Dow Industrials was 824.57.
At $1,196 today, gold has increased 1.4 times over.
But at 18,000 today, the Dow has increased 21.83 times over — a performance that’s more than 15 times better than gold’s.
So why do investors get so much of their dander up when it comes to gold?
The answer, in my opinion, is simple: They put way too much credence into conspiracy theories and into the sales pitches made by dealers and analysts who are nothing more than gold promoters.
[Editor’s note: For Larry’s guide to investing in precious metals and natural resources, take him up on this risk-free trial of his Real Wealth Report.
Because you see, overall, gold is not as great an inflation hedge as most would like to believe. The fact of the matter is this:
First, there are times when gold is a great inflation hedge, and there are times when it is not.
Second, there are times when gold goes up, and there are times when gold goes down, just like any other market or asset class.
Therefore …
Third, to maximize your profits in gold, you need to know when to be aggressively in gold, and when not to be.
And as a corollary …
Fourth, to also maximize your profits, you also need to ignore the garbage that’s out there about gold.
Gold is one of the most emotional markets on the planet, one of the world’s most recognized investments, all over the world.
Yet it is also the market where the biggest lies are told, the biggest myths are perpetuated, and where the largest amount of misinformation is spread.
I tell you this only because it’s my job to help protect your wealth. I have no vested interest in doing anything but that.
So bring on the gold investors — and especially the gold dealers and promoters — who will want my scalp for writing this today. I don’t really give a hoot. All I care about is spreading the historical truth, not BS, propaganda, or market myths.
That said, there will soon come a time — in 2015 — when it is prudent to load up on gold, but we’re not there yet.
I’ll keep you posted. And be sure to check my next column, one week from today, where I’ll give you more detail on the bottom I see coming in gold and silver, plus two more forecasts for 2015 …
Forecasts that — if they pan out as I expect they will — can help make 2015 your best year ever.
Happy New Year and best wishes,
Larry
About Larry Edelson
