Its no secret that I am a big believer in gold.
But today, I want to take a look at the
case against gold.
Starting from a low of about $250 per ounce in mid-1999, gold
staged a spectacular rally of over 600%, to about $1,900 per ounce,
by August 2011.
Unfortunately, that rally looked increasingly unstable towards
Gold was about $1,400 per ounce as late as January 2011.
Almost $500 per ounce of the overall rally occurred in just the
last seven months before the peak.
That kind of hyperbolic growth is almost always
Sure enough, gold fell sharply from that peak to below $1,100
per ounce by July 2015. It still shows a gain of about 350% over 15
But gold has lost nearly 40% over the past five years. Those who
invested during the 2011 rally are underwater, and many have given
up on gold in disgust.
For long-time observers of gold markets, sentiment has been the
worst theyve ever seen.
Yet its in times of extreme bearish sentiment that outstanding
investments can be found if you know how and where to look.
So far this year, theres already been a change in the winds for
A change that, in many ways, I predicted in my most recent
book: The New Case for Gold.
But today, I want to show you three main arguments mainstream
economists make against gold.
And why theyre dead wrong.
The first one you may have heard many times
Argument #1: Not enough
gold to support the financial system
Experts say theres not enough gold to support a global financial
Gold cant support the entire worlds paper money, its assets and
liabilities, its expanded balance sheets of all the banks, and the
financial institutions of the world.
They say theres not enough gold to support that money supply;
that the money supplies are too large.
That argument is complete nonsense.
Its true that theres a limited quantity of gold. But more
importantly, theres always enough gold to support the financial
But its also important to set its price correctly.
It is true that at todays price of about $1,300 an ounce, if you
had to scale down the money supply to equal the physical gold times
1,300, that would be a great reduction of the money supply.
That would indeed lead to deflation.
But to avoid that, all we have to do is increase the gold