May 31, 2012
-- Season Investments recently released a new Insight
titled Three Fundamental Tailwinds for Gold
. Below is a sample of the release.
“To me the gold price takes the form of a very uncomplicated formula, and all you have to do is divide one by ‘n.’ And ‘n’, I’m glad you ask, ‘n’ is the world’s trust in the institution of paper money and in the capacity of people like Ben Bernanke to manage it. So the smaller ‘n’, the bigger the price. One divided by a receding number is the definition of a bull market.” - Jim Grant
, Grant's Interest Rate Observer
For centuries gold has been considered a store of value. It was treasured by humans long before it ever became money in the form of gold coins around 700 B.C. Gold’s malleability, scarcity and luster made it a natural trading medium. Its portability and permanency gave rise to our modern day understanding of using currency in exchange for goods and services. When banknotes or paper currency were first introduced, they were seen as a promissory note to pay a debt in precious metals.
Recently, gold has been under attack by some very smart and well respected individuals. Ben Bernanke refused to acknowledge that gold was money when questioned by Senator Ron Paul last year. Warren Buffett stated that gold has no utility and equated its value to the “greater fool” theory (our words, not his) in his most recent annual report. Lastly, Buffett’s long-time business partner Charlie Munger was quoted saying, "Gold is a great thing to sew into your garments if you’re a Jewish family in Vienna in 1939, but I think civilized people don’t buy gold, they invest in productive businesses."
So if one buys off on all this reasoning, then people who invest in gold are like moths to a flame that are captivated by nothing more than a shiny rock. We have a different view on gold and its utility value as part of a well-constructed portfolio built on our Diversification 2.0 framework, and we see three major tailwinds working in gold’s favor right now...
The full release of the Three Fundamental Tailwinds for Gold
) is available on the Season Investments Insights
Season Investments (http://www.seasoninvestments.com
) is a Colorado based Investment Management firm serving a nationwide clientele. It was created to provide an accessible alternative to the traditional buy-and-hold approach pushed to most individual investors. The most sophisticated investors in the world utilize dynamic risk management and hedging techniques to protect their capital as they grow it. Likewise, Season Investment's unique approach emphasizes proactive downside protection (http://www.seasoninvestments.com/method/marketvane/
) as a way to compound greater returns over full market cycles. Capital markets move in and out of "Season" and experience short-term "Weather Patterns" just like the world around us. At Season Investments, we monitor these trends and invest accordingly.This information is not to be construed as an offer to sell or the solicitation of an offer to buy any securities. It represents only the opinions of Season Investments. Any views expressed are provided for informational purposes only and should not be construed as an offer, an endorsement, or inducement to invest.