Four Reasons Why Gold's a Slam Dunk Investment

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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%.

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%. This takes the primary argument against owning real money and blows its doors off. Granted, we’re only looking at a period of not quite two years here, but given the macroeconomic events that have transpired, it is clear that real money was the way to go...

...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...

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