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Salivating at the Upside Potential of the Gold Market

New gold Image 150x150 Salivating at the Upside Potential of the Gold MarketNot long ago, as I recall, a pension fund in some foreign country, one of  those Scandinavian ones I think, was ordered to invest no more than about 3% of  its custody assets in gold, meaning that the fund had too much gold, and to sell  part of its gold holdings in order to comply.

Personally, I think that the 4,500-year historical record shows that being  100% invested solely in gold over the long-term is almost always a Very, Very  Good Idea (VVGI), while the 4,500-year record of being solely invested in  stocks, bonds and housing over the long-term is almost always a Very, Very Bad  Idea (VVBI).

Thus, even to a really stupid guy like me, it doesn’t take a lot of  brain-horsepower to quickly see that to arbitrarily limit gold in one’s entire  retirement holdings to a measly 3% is, in a word, stupid, whereas 100% invested  in gold is not, again in a word, stupid, but, rather, in yet another word,  intelligent, in that gold soars while the debasement of a fiat currency is  always complete and catastrophic.

Or perhaps the word, in a word, could be “erudite,” as in referencing the  Mogambo Book Of Economics Stuff (MBOES) under “Erudite: at least glancing at the  entire 4,500 years of history and seeing very clearly that to not be 100%  invested in gold and silver over the long-term, especially when your government  is allowing such frightening increases in the money supply, is stupid and  ultimately ruinous. See also ‘Broke, Why, Stupid, People’ and ‘Catchphrase,  We’re Freaking Doomed (WFD)!’”

After all this talk of erudition, I am embarrassed to admit that I don’t know  the word for “stupid” in any of those Nordic languages. I don’t worry, however,  because the word for “stupid” in Spanish is “el Stupido,” so I figure that if  any of those Scandinavian guys speak no English but they savvy a little Spanish,  they can easily translate it for everybody else so that everybody can know that  they are, you know, stupid, in case they didn’t know.

Unfortunately, this translation thing will not convey how I laugh at them  with an undisguised Mogambo Sneer Of Contempt (MSOC), and/or how I, following  the proud tradition of Monty Python, fart in their general direction to show my  scornful disdain at their limiting ownership of gold to 3% of holdings.

So, my Timely Mogambo Tip (TMT) is that if you are some dumb-ass Scandinavian  who is letting these morons manage your retirement money, then you may be  interested to know that you are, as would seem to be inferred by this time after  the foregoing paragraphs which is one long indictment of the level of laughable  ineptitude of these losers, also stupid.

Of course, the stupid British let their stupid prime minister, the stupid  Gordon Brown, sell all Britain’s gold at less than $400 an ounce, so it is not  that there is no precedence for this kind of idiocy! Hahaha!

I bring it up because it fits perfectly with the essay titled “The Driver for  Gold You’re Not Watching” by Jeff Clark of Casey Research.

He says that “the elephant in the room is pension funds. These are  institutions that provide retirement income, both public and private.”

The “elephant in the room” part refers to size, not smell or any of the other  huge downsides to owning an elephant in an urban, apartment-dwelling  environment, as “Global pension assets are estimated to be – drum roll, please – $31.1 trillion. No, that is not a misprint.”

He calculates for us that this staggering $31.1 trillion “is more than twice  the size of last year’s GDP in the US ($14.7 trillion)”!

That exclamation point was put there by me, for dire reasons that I only  vaguely suspect, as even a piddly 3% of that $31.1 trillion pile of retirement  money, invested in gold, is a whopping $933 billion invested in gold!!

“Why the double exclamation points?” you ask. Have I got some weird reason  why I am always using so many exclamation points, like maybe I am being paranoid  and weird, plus be a full-time lunatic and part-time father?

Well, probably yes, for one thing, but also because, “The market cap of the  entire sector of gold stocks (producers only) is about $234 billion,” while “If  these funds allocate just 5% of their assets to gold – which would amount to  $1.5 trillion – it would overwhelm the system and rocket prices skyward.”

He goes on “According to estimates by Shayne McGuire in his new book Hard  Money; Taking Gold to a Higher Investment Level, the typical pension fund  holds about 0.15% of its assets in gold. He estimates another 0.15% is devoted  to gold mining stocks, giving us a total of 0.30% – that is, less than one third  of one percent of assets committed to the gold sector.”

My excitement rising, he goes on, “And let’s not forget that this is only one  class of institution. Insurance companies have about $18.7 trillion in assets.  Hedge funds manage approximately $1.7 trillion. Sovereign wealth funds control  $3.8 trillion. Then there are mutual funds, ETFs, private equity funds, and  private wealth funds. Throw in millions of retail investors like you, me, Joe  Sixpack, and Jiao Tsingtao, and we’re looking in the rear view mirror at $100  trillion”!

And this $100 trillion mountain of money trying to get into a market of gold  and gold stocks that is currently valued at less than $1.5 trillion makes me,  and him, too, salivate at the prospect, as he concludes, “I thought of titling  this piece, ‘Why $5,000 Gold Is a Conservative Forecast.’

Related posts:

  1. Is the Gold Trade Crowded?
  2. Greenland shows off its mining potential
  3. The Driver for Gold You’re Not Watching
  4. The Gold Bullion Market
  5. Newcomer to the Gold Market?

Link to this article: : http://www.goldmadesimplenews.com/gold/salivating-at-the-upside-potential-of-the-gold-market-3249/

Posted by on Mar 29 2011. Filed under Gold News. You can follow any responses to this entry through the RSS 2.0. Responses are currently closed, but you can trackback from your own site.
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