The Aftershock Investor: A Crash Course in Staying Afloat in a Sinking Economy

CHAPTER 8

Gold

THE ONCE AND FUTURE KING

Why do investors buy gold? Or should we ask why do so few investors want to buy gold now and why will so many more investors want to pile into gold later in the Aftershock?

Right now, the idea that gold is a good long-term investment is controversial and prickly. People generally don’t like it. Gold may be favored by some unconventional investors, but by far, most Americans do not currently own gold and they have no interest in doing so. Their conventional wisdom (CW) portfolios are generally loaded with stocks, bonds, and perhaps real estate. The idea of adding a significant amount of gold to the mix seems unnecessary, even silly to them, just as it seems silly to many financial advisers and the famous investors they revere, like Warren Buffett and others.

This is what we meant earlier in the book when we said that Aftershock investing is so uncomfortable. It just doesn’t feel right compared to the comfort of conventional investing, and you won’t find strong mainstream support for it. It is hard—very hard—to go against Warren Buffett.

We released ourselves from that difficulty many years ago when we were writing America’s Bubble Economy in 2005. With the correct macroeconomic view, it really was not that hard to see all the bubbles (stocks, real estate, etc.) rising and then beginning to fall. With this same macroeconomic view, it is also not that difficult to see that gold will eventually be the biggest, most profitable bubble of our lifetime. ...