Gold Is for Real Wealth Preservation—Not Speculation
Source: BMG, David Ranson (3/22/11)
"BMG builds a case for gold as the ultimate portfolio diversifier."
David builds the case for gold as the ultimate diversifier for portfolio diversification and protection step by step. He begins by looking at the varied definitions of inflation, which is often misrepresented by the media. David examines the Consumer Price Index (CPI), discusses how it has been re-engineered on many occasions and how this has led to its ineffectiveness as a gauge of inflation. He then goes on to explain why gold is actually a much better leading indicator of inflation and looks at the long-term relationship between gold and the CPI.
Then attention is focused on the devastating effects inflation is having on fiat (paper) currencies with all major currencies suffering from significant devaluation. A trend which is set to continue as debt levels and money supplies increase. He also discusses how the mindset towards gold has been heavily influenced by decades of negativity by academics and policymakers who have long denied the significance of gold.
David then shows it is gold, not oil that those concerned about inflation should we watching. He points to the fact that correlations between oil price changes and inflation are much lower than those for gold, demonstrating that gold is a much better indicator of inflation than oil. This correlation is explained as gold behaves differently to oil due to the minimal new annual supply of gold compared to other commodities such as oil and the fact it is accumulated rather than consumed. The Dow:Gold ratio is also defined and we see that an understanding of this ratio further supports the case for gold.
Finally, gold's performance and volatility over time is scrutinized and we find just how well it has held up against all other asset classes. David concludes by stating that gold really is the best tool to protect portfolios and preserve wealth and examines how much gold is needed in a portfolio to be suitably effective against the threat of inflation we are seeing today.
We strongly recommend that readers take the time to watch the one hour webinar replay available on our website. A PDF summary is also available.
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