January 13, 2011 – The gold bullion market is one of the last bastions of equal opportunity investment. There was a time when the stock market was open to everyone, when the individual had the same access to information and the same opportunity to participate in initial public offerings (IPO) as the biggest traders. But government regulation has seen to it that the IPO market, where the real money is made, is now the exclusive province of Wall Street’s elite.
In the Wall Street Journal, Europe, L. Gordon Crovitz states that “Facebook should be a wake- up call about how regulations have undermined public markets.” Rather than give individual investors a chance at their IPO, Facebook sold the entire $500 million offering to Goldman Sachs as private equity. And their reason is clear.
Public uproar over debacles the likes of Enron and WorldCom led to the passage of the Sarbanes-Oxley Act in 2002, a massively complex set of regulations whose stated aim was corporate and auditing reform in the name of investor protection. What it did, however, was make the IPO undesirable as a means of raising capital for new ventures. Private equity, which is free from Sarbanes-Oxley regulation, is a far more favorable option.
Private equity offerings not only shut out individual investors, they also close off the free flow of information required by public exchange, opening the door to misinformation and creating an ideal climate for bubbles to form.
Crovitz says that “the goal of securities regulation should simply be to ensure that accurate information gets to the market as quickly as possible . . . The would-be investing public should defriend the politicians who took away their markets.”
We should also “defriend” Wall Street and put our money into gold bullion where they can’t get their grubby mitts on it.
