Points of Few – Golden Rule or Urban Myth?

By Alan Steel

I was reminded recently about an urban myth regarding gold as “an ideal hedge in times of trouble.”

What utter nonsense.

Back in September 2011 (link here) I wrote that “wars and tsunamis (be they actual or financial), currency and debt debacles, even inflation worries are typical breeding grounds for a rising Gold price. And that’s what we’ve seen over the last 10 years.”

At about that time the talking heads predicted Gold would continue on what was at that time an upward trajectory towards the dizzying heights of $2500 to $3000 an ounce.

So what happened?

Well you can see from the chart above that it “AU went doon” from about $1950 and has continued in that direction ever since.

Still, not long afterwards private investors dumped stock market investments to buy it in a run to perceived safety, for what reason I really don’t know – the major indexes have been on a record-breaking rise now for over eight years.

Now don’t get me wrong, I’m no expert on Gold.

(Pies and sausages? Now that’s another story…)

But after 44 years in the finance industry I’ve learned that when herds and commentators love something, it’s usually time for a fast exit (call it a “Fexit”).

No doubt one day Gold will pop. But until then try and keep things in the real world of rising dividends, which are still coming it seems from rising profits.

And get some good advice. 

Because after all, it’s your money we’re talking about here.

Alan Steel, Chairman, Alan Steel Asset Management

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