STAFF NEWS & ANALYSIS
Gold: Best Asset of the 2000s
By Staff News & Analysis - March 08, 2010

Gold has proved to be the best value investment over the last 10 years, new research has disclosed. The price of the precious metal rose 277 per cent during the past decade, with investors particularly attracted to gold during the recession as they sought a safe haven for their money. Overall, gold, silver and platinum increased in value by 242 percent between December 1999 and December 2009, the equivalent of an average annual return of 13.1 percent. The price of gold soared during the recession as investors sought a safe haven for their money. Despite the slump in the housing market in the past two years, property has produced the second highest return after precious metals during the past decade of 187 percent or 11.1 percent a year, according to the findings by Halifax. Shares saw an average return of just 18 percent over the decade, while cash returned 57 percent. It comes despite savers seeing their rates of return plummet to record lows after the Bank of England cut interest rates to just 0.5 percent a year ago. Suren Thiru, an economist at Halifax, said: "Precious metals were the top performing asset during the noughties, largely reflecting increased demand from China and India for industrial uses and jewelry." – UK Telegraph

Dominant Social Theme: We are puzzled and perplexed, but no doubt things will soon get better.

Free-Market Analysis: It is really is unfair in our view how the mainstream media misleads so many people when it comes to investing. As financial journalists throughout the 1990s we heard over and over from the planning and brokerage establishment that gold and silver were purchases for up to maybe five percent of one's investments as a so-called "safe haven" but no more. This was the standard line – and many in the US and Canada where financial planning is most advanced may not even have recommended this much to clients.

To us there was little debate. We could see what was coming even in 2001 when gold was around US$250. Some of us aggressively acted on our beliefs. In aggregate we had lived through the 1970s and the fundamentals were much the same and only increased when George Bush began his string of serial wars. Yet the financial planning community in the West didn't seem to see it. Advisers continued to recommend REITS, mutual funds, individual stocks and bonds instead of gold and silver. To us it was absolutely obvious – and to many others as well – that the 2000s were a repeat of the 1990s, only a cycle that would probably stretch longer, probably until 2015.

In fact, what we failed to understand was just how bad this cycle really is. The 1970s were bad but salvageable. We are not sure Western fiat money is salvageable this time around. It is truly remarkable to watch. Western countries have been so distorted by fiat money printing that there is likely not one industry, one entrepreneur, one government service wholly untouched by mal-investments. That's what mercantilist (public/private) fiat money does over time. It distorts every thing it touches until society has become so inefficient that it can hardly function anymore.

So what do the powers-that-be do? They sure don't tell the truth. Apparently in a bad enough crisis they double down. They print MORE worthless money, fueling the distortions and propping them up if they can. The idea is to spread the pain over time, someone explained to us recently, thus avoiding outright rebellion. But we wonder how effective this strategy will be this time round. There are still bubbles aplenty.

The biggest bubble of all, of course, is the banking bubble because that is the way that fiat money is distributed. No matter how many businesses go out of business, commercial banking especially gets bigger and bigger around the world. The end result would be a handful of big banks and nothing else if trees grew to the sky, but they do not. The irreducible reality of the Invisible Hand chops them down. But no one in the mainstream media will tell you that. Not even the "best" papers.

Just look what the Telegraph article reports: "Precious metals were the top performing asset during the noughties, largely reflecting increased demand from China and India for industrial uses and jewelry." This simply isn't true. Honest money – Gold and silver – went up because central banks had printed too much worthless paper money, distorting the Western economy so no one knew – or knows – what companies are good investments, what products are practical (versus overproduced) and what governments are yet solvent. No one knows anything in fact (and still!) except that gold and silver hold their value and continue to rise because of it. The relative pricing has nothing to do with jewelry and everything to do with fiat money distortion.

It is truly a shame that people are misled by the Western mainstream media and governments into thinking private/public fiat money is viable over the long-term. It is not. But another problem is that the money system we have now is so entrenched and so promoted that it does not seem the truth can be otherwise. All the big magazines report on fiat money still and "problems" are only mentioned in the context of a system that still works.

Explaining to the uninitiated what is going on is a big job indeed. We call it "dreamtime." One has to realize that every aspect of Western society has been corrupted by mercantilist central banking and its fiat money over the past 100 years. Almost nothing is real. The great banking edifices, the vast governmental bureaucracies, the sprawling militaries and global corporations – none of these would look like they do without the current imploding money system. It would be an entirely different world. It would be far more equitable as well from our point of view, far less conflict-ridden and full of real human progress instead of phony solutions to the endlessly promoted lies of the power elite's dominant social themes.

After Thoughts

Only in retrospect, probably, will we see a spate of articles declaring gold and silver's best-investment status over the past decade. We certainly didn't see these articles DURING the decade. And likely they will soon vanish once again, even if gold and silver continue to rise, as we believe they will. No, we will continue to be exposed to a vast wave of promotional propaganda proclaiming that the tottering fiat money system is "turning around" and "recovery is underway." But this time round the Internet, coupled with the real financial pain that people are feeling, may prove enough to bring about significant change. History seems to tell us so. We may be living through a pivotal time and Chinese jewelry demand has nothing to do with it at all.

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