Right on the Money: Doug Casey on Economics, Investing, and the Ways of the Real World with Louis James

Chapter 12

Doug Casey on Nuts and Bolts: Handling Bullion

July 15, 2009

Louis: Doug, we get a lot of questions about how to handle significant amounts of bullion. So let’s talk about physical gold, and what to do with the stuff. First off, do you really think that people should put as much as one-third of their asset portfolios into physical gold?

Doug: Yes, I do, and at considerable risk of repeating myself, I’ll tell you why:

First and foremost, precious metals bullion is the only financial asset class you can own that is not simultaneously someone else’s liability. When you own an ounce of gold, you own an ounce of gold. It’s not just a piece of paper that conveys a right to it from parties that may or may not even exist if and when you want to turn their liability into an actual, unencumbered asset in your pocket.

With today’s markets suffering from volatility and disruptions of truly historic proportions, that sort of solidity is worth a lot, as you can see from gold’s continuing strength. The dollar is in huge trouble and is on its way to reaching its intrinsic value, which is very bullish for gold.

Second, gold is natural money. It’s uniquely well suited for use as money. Aristotle explained why, over 2,000 years ago, but in brief, it’s because it’s convenient, consistent, durable, divisible, and has intrinsic value (or, in Austrian economic terms, it has high intersubjective value).

So, if things get really bad and push comes to shove, you’ll always find someone willing ...