Chapter 9

Worshipping the Golden Calf

Too many investors become Gold Bugs and fall in love with their investment. Sometimes it's a great investment, and sometimes it's a sure loser; here's how to tell the difference, when to buy it, and, more important, when not to.

In Chapter 2 I discussed the folly of worshipping the false and deceptive god Mammon. Now I want to persuade you that it is an expensive mistake to worship any investment, but especially the Golden Calf. This is one of the rare times I learned something important by getting it right!

When I first came onto the investing landscape in 1975, I saw nothing but inflation ahead of us for several years at least, and became a vocal advocate for gold and silver as inflation hedges. My best-selling book, How to Prosper During the Coming Bad Years, was the first popular best-seller to alert the public at large to gold and silver as an inflation hedge. Gold subsequently soared to more than $850 an ounce in 1980, up from $120 an ounce in 1975 when I first recommended it. I have been told that because the book sold more than 3 million copies, it was a major factor in creating that spectacular gold and silver bull market and legitimatizing gold and silver as popular mainstream investments.

I thought of gold as an appropriate investment for the times, but I soon found out that for millions of Americans (not to mention Germans, Swiss, etc.) it was a near religion, with its own dogma. Massive investment conferences attended by thousands ...

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