Gold Skeptic Changes Mind And Buys In For First Time

February 3rd, 2014 by

gold rally

Moneyweek’s Ed Bowsher explains why he’s changed his mind about our favorite “barbaric relic” in his article “I’ve Never Bought Gold Before – But I’m Buying It Now“.

Admitting that he’s never understood the attraction many people have for gold, he runs down what he found when he started looking at the present gold market. His journey began by noticing that the conventional wisdom was overwhelmingly negative, citing an article noting that the bearish outlook on gold was at its highest since 2002. Considering the track record of “conventional wisdom,” he started doing some research, and found:

  • The price of gold is near the all-in production costs for mining companies
  • Low real interest rates lower the opportunity costs of owning gold
  • Gold is a proven “insurance policy” to shield your portfolio against volatilty

Check the article out, and see what conclusions he reached. In our opinion, he was doing great, right up until the end. See if you can spot where he goofed. (Hint: it wasn’t the decision to diversify 5% of his portfolio into gold.)