Right now the market feels that nobody needs to own gold. The vix is at an all time low. The gold premium is at an all time low. Gold is still over $2000 - but it's been stuck there for almost 8 years.
Why Gold is irrelevant: Growth is about to pick up, Inflation is back under control. Debt is not really a problem in the modern financicalized economy. War is not a problem for the US because we have the strongest military on earth. And we're about to relelect a strong man president/ruler who will strike terror in the bearts of our enemies. Artificail Intelligence is going to turbo charge efficiency and productivity. We are the most honorable country in the history of the world, blessed by God who will reward the righeous with wealth and power.
All that makes gold irrelevant. If you believe that you should sell all your gold right now and buy stocks. Stock is ownership of American Industry, the greatest industry on earth and in the history of the world. Strong men and women own that. Weak ineffectrual naysayers who always think the sky is falling are the only losers who buy gold. = which after all, produces nothing, creates nothing, and has no yeild or earnings.
That pretty much sums up the argument against gold. And it's a strong argument for strong men and women.
But if you dare question any of that maybe start with the idea that debt just doesn't matter. I know if rates are at zero debt may not matter. But what about at 4 or 5 or 6 or 7 or 8 percent. Does debt begin to matter at some rate of interest? Doesn't debt require interest payments - espcecially when interest is high.
It kind of does.
Also you might questioning the idea that inflation is back under control. Starter houses at a million dollars may seem expensive to some people. Food, energy, education (none of which count in core CPI) still seem expensive to some people. College at $70,000 a year and cars starting at $30,000 and a latte at Strabucks at 6 dollars still seems expensive to some people. Not big strong people maybe but to the rest of us.
And inflation is cycliccal. It's always been cyclical and unlesss the nature of economic reality has changed we are in an inflationary up cycle where it goes up, comes down a bit then goes higher.
What if that happens? Probably it can't. But what if history is a guide, just in this one case?
What happens to growth if inflation stays up abover 3 or 4 or 5 percent? Then growth goes down by the same amount. Mathematically speaking. I hate to bring up math, It's so weak ane UnAmerican. But math still exists, I think
High debt, High inflation, low growth?
Well, that sounds like the beginnings of an argument for Gold. Not that I'm saying those most unAmercian things will happen. But it does seem in the realm of possibility.
And what if the hot war in the middle east expands and the hot war in Central Europe expands?
Of course AMerica is so strong is probably doesn't matter, But isn't war expensive? Where do we find the money for it when we're running 3 trillion dollar yearly deficits for the last 8 years? Not that 3 trillion is a lot for us Real Strong Americans but to a weakling 3 trillion might sound like a lot. And an expanding hot war will cost a lot more than that.
Anyway, obvioulsy things are great. So sell all your gold.
Unless you think debt, inflation and low growth and war might be possible. (The US economy trend growth for the last 8 years has been 2 percent - if you use vastly undercounted inflation measures. If you use the same inflation measures we used in 1970 trend growth over the last 8 years is zero).
Then maybe think about gold. Just a tiny little bit.
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