23 December 2012

Ape the Rich


There are probably diminishing returns to this investment strategy, but aping the rich is not a bad idea, at least in this case:

Investors worried that inflation and financial market turmoil will wipe out the value of their cash have poured money into gold over the past decade. Prices have gained almost 500 percent since 2001 compared to a 12 percent increase in MSCI's world equity index.
Sales of gold bars and coins were worth almost $77 billion in 2011, up from just $3.5 billion in 2002, according to data from the World Gold Council.
"The rich are buying standard bars or have deposits of phsyical gold. People that have less money are buying up to 100 grams," said Michael Mesaric, CEO of Valcambi "But for many people a pure investment product is no longer enough. They want to be able to do something with the precious metal."

If people who make their money in stocks don’t think that stocks are going to be very profitable for much longer, then one of two things is the case:  either we’re about to see a very impressive opportunity for making money in the stock market because all the experts are collectively wrong, or it’s time to buy gold.  I’ll let the reader decide which scenario is more likely.

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