Even Now Few Own Gold


"There is much more room for an expansion of demand for gold than there is for U.S. paper assets."

From 1933 to the end of 1974, it was illegal for Americans to buy and own physical gold as an investment. It was more illegal than heroin: an American purchasing gold in Switzerland broke a U.S. law, while purchasing heroin outside the U.S. did not break American laws.

Once it again became legal to purchase gold, it took some time for the commercial sector to make it available to the retail public. Prior to 1933, anyone wanting to own some gold coins merely had to go to the local bank to get all they wanted.

For the past 35 years, no American bank has been ready to supply gold to any customer that walked up to a random teller's window. The gold market is largely handled by coin dealers.

So, one reason why few Americans own gold is just being out of practice. However, a more important reason has to do with how investment firms make money. They depend on turnover of account assets for fees and also derive a surprising amount of interest income off the float of customer money.

Investment firms must discourage ownership of gold, silver and other tangible assets to make money.

I have in hand an 11-page report from one of the large national stock brokerage firms that is dated June 11, 2009. The title is "Industrials & Materials: Gold Supply and Demand: Bullish on Bullion?"

The report contains several accurate bits of data. It also includes information accurately picked up from other sources, but these sources have huge flaws in their data. The report also includes expectations that are contradicted by existing facts.

I won't identify the brokerage as I suspect such errors and distortions could be found in gold reports from almost any U.S. brokerage.

Investors far and wide receive this disinformation, so it isn't surprising that relatively few investors own gold. One report said that 48% of American adults own corporate stocks. The only guesses I can find for the percentage of adult Americans who own investment gold range from 3% - 9%. There is much more room for an expansion of demand for gold than there is for U.S. paper assets.

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