Four Reasons Why Gold's a Slam Dunk Investment
Source: Seeking Alpha, Andy Sutton (8/31/08)
Many in the mainstream press will quickly scoff at the idea of holding Gold and Silver, because they don’t pay dividends. So to be fair to their argument, I calculated the movement in the S&P500 Dividend Reinvested Index from 10/31/2006 to the last report at the end of this past July. Even with dividend reinvestment, the S&P500 is down 4.78% while Gold is up nearly 50%.
...what would need to happen to make precious metals unsuitable for investment? There are dozens of prerequisites, but we’ll stick to the Big Four.
• Since precious metals, particularly Gold are proxies for inflation, we would need to see worldwide inflation slow dramatically.
• Geopolitical risk would have to decrease. Risk tends to be friendly towards precious metals...
• Systemic risk to the financial system would need to be swept away. This is no simple task and, despite what Bernanke & Company choose to say, it is clear that the systemic risk to the financial system is nowhere near close to abating...