Wrapped Up In Gold
March 14, 2012
When you bought your car insurance, or your house insurance, did that dominate your thinking for months on end?
If you are like me, you probably called your agent, reviewed his recommended alterations and 10 minutes later you were good to go. Ah, the convenience of small towns.
Buyers of gold as insurance against economic catastrophe on the other hand seem to enjoy living with it day by day.
It has become something like a football game that never ends. When we are in a period of rapid price gains, the sky is the limit. When markets go down as they are today, there must be some sinister force at work countering the skills of the home team.
Yet, anyone who has a more laid-back attitude to the precious metal and perhaps other investments and doesn’t check everyday probably feels pretty good even as gold trades down by over $50 an ounce this morning.
Since the beginning of the year, gold and silver are higher. Most balances in retirement accounts are also likely to be higher if they include stocks in them.
If you follow the conventional advice to keep gold (and other precious metals) at no more than 10 percent of your portfolio, the outcome this year to date looks pretty healthy. Even comparing today’s conventional portfolio numbers to those from the stock market’s high in 2007 look good.
Going back further, if you had gold and stocks untouched since 2001, you are also probably feeling pretty good. Gold had a great run and your holdings would have swelled far beyond the 10 percent you started with. This would have more than offset any losses caused by the fairly flat performance of the stock market even if you owned some bank stocks that might have crashed and burned in the post-2007 period.
Gold, though, will never lose its allure. It just seems to demand attention from collectors. It will always be something more than just insurance to us. We cannot help but watch it.
But don’t let this fascination dominate your numismatic activity. If you collect gold as historically important and valuable coins, you have your gold insurance and a much more interesting way to spend your time with the precious metal.
On March 17, 2012 Chuck Schroeder
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