Why I'm Buying Gold

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Pearson Education, Feb 1, 2010 - Business & Economics - 8 pages

The value of gold doesn’t depend on banks or governments keeping their word. In fact, the more they fail, the more gold is worth. And now, with public faith in the system dribbling away, gold is becoming one of the last safe havens. Also, the global financial crisis is far from over. It could topple into either inflation or deflation. Holding a strong position in gold is a good strategy in either case.

I hope I’m wrong. Because, if I’m right, it will be bad news for the global economy and for all of us--even for those of you who buy gold. You’ll do better than people who don’t, but no one will come out well. As JFK never said, a falling tide lowers all boats. Yes, I said buy gold--that relic of the days before paper currencies and central banks. It’s faintly ridiculous to hold gold; you have to be one of those nuts carrying a sign: “The End of the World Is Nigh!” Gold doesn’t finance companies or build economies: It just sits there. But remember, the economic world did nearly end in 2008. No one knows how close we came to the point where no one would accept anyone else’s checks, or foreign currencies, or even dollars except at a huge discount. Fortunately, the U.S. government’s extreme moves saved the day--but we’re not safe yet. At times like these, gold becomes king.

 

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About the author (2010)

Dean LeBaron is one of the world’s most respected institutional money managers and author of Mao, Marx, and the Market. The founder of Batterymarch Financial Management in Boston and a distinguished alumnus of the Harvard Business School, he is one of the pioneers of index funds and quantitative investing. He was an early, and sometimes first, institutional investor in the emerging markets of Argentina, Brazil, Chile, China, India, Indonesia, and Russia and was invited by the Gorbachev government to help privatize the Soviet military industrial complex. In 2001, he joined such investment luminaries as Warren Buffett as the recipient of the prestigious lifetime achievement award from the Chartered Financial Analysts Institute.

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