Here at preciousmetalsinvesting.com we invest part of our wealth in the physical precious metals because it is one of the only investments that eliminates counter-party risk. However it is sometimes hard in today’s market where the focus is on short term price movement to remember why you invested in precious metals in the first place. The voices of anti precious metals pundits are often loud and sometimes we have trouble listening to our own wisdom. It’s interesting to note that current studies in Neuroscience which have tracked the record of financial pundits points out the truly dismal record most of them have. Studies have shown that the degree to which the typical pundit is certain in his prognostication and the more assured in his own wisdom the less likely he is to be right. We have seen some pretty spectacular “bu-yah” failures recently. Phillip Tetlock a Leonore Annenberg University Professor, School of Arts and Sciences (Psychology) and Wharton School (Management), Phd. from Yale, chair at the University of California followed up this initial study by picking 284 people who made their living “commenting or offering advice on political and economic trends.” The conclusion, after all the data was tallied, was that they tended to perform worse than random chance.
I think a quote from Dow Theory Letter’s Richard Russell puts things in the right perspective:
“A few thoughts about gold. Never buy gold for a profit, gold is a measure of wealth. Count your gold holdings in the number of ounces, not the current worth in dollars. You don’t price the home you live in every day, or with each passing week. Nor should you price your gold holdings in dollars with each passing day. Gold is a timeless wealth asset; an asset that will have a value with the passing of time.
Remember this: Of the original issues that made up the Industrial Average, only one remains. And that stock is General Electric. And what happened to all the rest? In investing, nothing is permanent except gold. But remember, do not buy gold with the idea of making a profit. Buy gold because it is pure wealth, and may be the last man standing.”