I haven't been carefully following this thread, but I'll respond anyway
. First, I thought the poll results were interesting. My interpretation: For the most part
, I think about one-third of the folks here think gold may continue its run. I think this is very possible too. Then there's the crew that doesn't. They tend to not like gold or, in some cases, commodities A large portion of the folks here have made a substantial part of their money invested in the stock market. Plus a big part of that "growth" is due to financial stuff (specifically loose, borrowed, easier than historical money, whatever that is). Many people think such things will stay the same (see FIRE-calc and its believers)--that things will continue pretty much along the same lines of not just the past thirty years but also pretty much along the same lines of the past 100 years. And it may--unless you look deeper into the bear case, if you believe it. But one can easily see why the defense of the current system is going on; it has been very, very good to many, many people over the past 20-30 years. Even here at this poll, nearly two-thirds think gold holding is some sort of mild abomination. All of them have made their money inside that system, following the rules of the game.
Some gold bugs see a reckoning of sorts--that this way comes. They tend to see further out than 30 years. They know that EVERY paper currency has been debased by the government that controls it at some point in time. In fact, the first step is usually to sever the bond between paper money and gold. They always do it by stealth so that many, many citizens don't see it while its in process (see "inflation" CFB, and the doctoring of numbers that even you admit is happening). Oh, and the deficits on the Federal level and the huge debts, both personal and at almost every level of our society. Gold bugs tend to see an active conspiracy going on of printing, spending and lieing. This may or may not be true. The gold bug argument is that it is NEVER different this time, that once the debasing of currency gets going it is almost impossible to stop except with some sort of crisis (see So. America for their history of handling paper money). But maybe it's different this time for us
One can see the tilt of debt in a specific direction and a doom, gloom, or possible boom (explosion) on the horizon. Gold bugs, at least the ones I read, see only one or two possibilities: either we (as a gov't--and people who have voted for such) continue to grease everything with M1, M2, and M3 to keep things from falling apart; or we fall into a recession/depression until most of the debt is worked off. This includes Medicare and Social Security obligations too. We can go either way--maybe both. And it still may be a long dragged out process that won't even unfold in our lifetimes. That's a possibility. But some of my money is betting on sooner.
What I've mentioned above are all extreme cases, just for illustration purposes. Real events will probably fall somewhere in the muddle between. For me as someone who sees such negative possibilities in the future a moderate position in gold is a good thing. I don't think being 70-80 years old and having a house I can't afford to live in anymore, a gov't that may not be there for me in any way, and an inability to get a Wal-Mart greeter job because a deserving youngster needs it more is a good possibility for an ending. So I own some gold shares just in case money turns into you know what. Maybe I'll be able to buy a ton of it to burn and stay warm with 1/4 oz of AU--although it's probably filled with toxic preservatives that the gov't hasn't told me about--either. Or maybe I'm wrong.
I think a small position of 5-10% gold is a cautious and prudent portfolio choice if a few of the circumstances I mentioned are believeable or possible in your lifetime.
--Greg
