Jim Letourneau's Blog

Investing, Technology, Travel, Geology, Music, Golf. I think that covers it.

Why Gold?

Here are a few reasons that investors are liking gold. Rob McEwen, founder of Goldcorp threw out a $5000/oz target three to four years out. He pointed out that Gold is used as insurance for bad governments."

Speaking of "bad" governments, Portugal's credit rating was knocked down a couple pegs by the Fitch Group. It is easier to see credit problems in smaller countries but the story is the same across much of the developed world.

Gold is a good store of value, especially in inflationary times. While not all inflation statistics can be trusted, I keep checking the Billion Prices Project @MIT and it looks like the annual rate of inflation is breaking out above the 3% level.

When a country's currency collapses a bunch of bad things happen. Bank accounts are frozen, credit and cards may be refused and people get desperate. Argentina's corralito is a recent example. The fact that the measures taken in Argentina seem unthinkable are precisely why it is prudent to plan for it. I've read very little so far in the role of precious metals during the corralito but I'll do some digging for a future post.