REVERSION TO THE 40 YEAR MEAN: MEANS GOLD WILL QUADRUPLE

 

Paper Gold is currently trading at over $1900.  Real Gold is trading over $2000.  Yet gold ownership as a percentage of all investment is at about half of one percent - near an all time low.  

This means the mass of the investing public is not participating.  Central Banks and the very wealthy are bidding gold up all by themselves.  

The 40 year mean of gold investment as a percentage of all investment is about 2 percent.  During periods of gold mania gold investment has exceeded 5 percent of all investment.

That means that the average investor just doesn't see any problem that they need to protect themselves against.  

Political instability, instability in the currency markets - the two largest drivers of central bank investmenty in gold - is obviously worrying the hell out of the central bankers of the world.  Not so, with the average investors.  They don't see a problem.  Or they don't see the problem.

Massive debt and extreme inequality of wealth - 2 problems that are super obvious to the wealthy investing class just don't seem to be as obvious to the vast middle class.  Even though it is they who suffer from these problems, they somehow don't see a systemic vulnerability in them.

Why?

Conditioning.  The vast investing class sees a superstructure of paper assets that has gone straight up for the last 40 years.  The fact that this has occured at the same time the Central Bank has been systematically lowering rates from 19 percent to zero while rackingh up hundreds of trillions in interest free debt doesn't seem relevant.

But now that the borrow-your-way-to-prosperity game has ended it has become relevant.

And sooner or later that will be as obvious to the investing public as it is to the Central Banks.

And when that happens Gold investment only has to revert to the mean for gold to quadruple.