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There is a whole lot more to gold bullion inverstment than speculation.

May 18, 2011 – If you listen to the “common wisdom” of economic pundits you might get the impression that gold bullion investing is no different from rolling the commodity dice. Gold’s bad rap, however, comes from the Wall Street mindset that has totally perverted the original concept of market participation.

On Wall Street the game is all about money making more money out of thin air, so every investment is weighed by how many dollars it produces. It is true that when you purchase gold bullion and store it in a safe-deposit box, when you return at a later time you will not find a stack of greenbacks that the gold produced. Gold’s appreciation may produce dollars in a sense, but only because the dollar has lost value. Likewise the growth of dollar-based assets is likely to accounted for by the same thing.

Wall Street logic is no different from our government’s. For example, Irwin Kellner points out in MarketWatch how market bulls seized on the April retail sales report as positive news that the economy was growing. After all, consumer spending is 70% of our GDP. But there’s one tiny flaw in that logic.

March’s 0.9% growth in sales and April’s 0.5% growth “were largely due to rising prices; in real, or unit, terms, sales were flat — if not down, month over month,” says Kellner. To see how that works, consider gasoline sales.

In March “the dollar value of gasoline sales rose 4.1% ,” but by volume sales were down. Likewise in April “a drop of 0.6% in actual gallons bought [turned] into an increase of 2.7% in dollars rung up at the register.”

It is as insane to use a declining currency to evaluate an investment as it is to use it to gauge the state of the economy. But both our government and Wall Street (if indeed they can be separated) do so make things appear much better than they really are.

There is a whole lot more to buying gold bullion than speculation – it’s true worth is in regular, long-term investments. True, gold just sits there, holding its value by the only important measure – purchasing power. But over the long haul, the wealth held in gold bullion can easily outstrip all of the cheapened dollar gains of traditional investments.

Daily Updates Archive

Jonathan Monroe

Senior Staff Writer -

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