The mainstream financial media seems to have a particular disdain for gold. Why is that?
In this episode of Money Metals' Midweek Memo, host Mike Maharrey gives some examples of mainstream folks dumping on gold and offers some theories as to why they always seem to think it's time to sell the yellow metal - no matter what.
He also offers a little food for thought for people who think that just because there hasn't been a financial or economic crisis yet there won't be one.
Mike starts the show off by talking about a girl he went to school with who was bullied because she wasn’t particularly attractive and who was extremely socially awkward. But as she got older, she underwent quite a transition. She went from an ugly duckling to a beautiful princess.
“There were a lot of dudes who regretted picking on her when she was younger. I feel like gold is kind of like Christy. It is considered the ugly duckling of the investment world. The mainstream constantly dumps on it. People who advocated for gold are derisively called “gold bugs.” But I think at some point gold will come into its own.”
Mike provides several examples of mainstream figures dumping on gold, starting with a commodity strategist who recently appeared on CNBC. About a month ago, he said it was time to sell gold.
“That take sure didn’t age well. I went back and looked. The day Danny-boy offered this sage advice, gold closed at $2,162 an ounce. Since then, it is up by over another 8 percent.”
Mike offered some other examples of prominent mainstream figures who have poo-pooed gold including Jim Lebenthal, Warren Buffet, and Dave Ramsey.
“This anti-gold sentiment is rampant, even now with the big rally.”
Mike proposes two reasons for the general antipathy toward gold.
First, selling gold doesn’t really benefit financial planners.
“They’re not going to make a bunch of money if they recommend you buy physical gold. … Since the world of investing and financial planning and the mainstream financial media are connected at the hip, pundits and talking heads tend to reflect this attitude.”
Second, most people in the mainstream don’t understand macroeconomics and therefore don’t get what’s actually going on.
“Most of them learned the intricacies of finance, but they never got a good education in economics. And their education consisted almost exclusively of Keynesian claptrap. They believe a bunch of nonsense like a little inflation is a good thing, money printing, and government stimulus can “rescue” a shaky economy with no consequences down the road, and a strong economy creates inflation.”
Mike goes on to explain some of the macro trends the mainstream is missing that he thinks will impact the gold market moving forward.
He concedes some people will dismiss his gloomy forecast. After all, we haven’t had a crisis yet. Mike explains why that might be a false hope, and he uses the timeline of the 2008 financial crisis as an example.
“The point is just because ‘nothing has happened’ doesn’t mean nothing is going to happen. It’s like that meme with the little cartoon dude sitting at the table with flames raging all around saying, ‘This is fine.’ You can think that all you want. It’s not fine.”
Mike wraps up with a call to action – think about getting gold and silver. Despite the recent rally, he thinks this is still a buying opportunity.
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About the Author:
Mike Maharrey is a journalist and market analyst for MoneyMetals.com with over a decade of experience in precious metals. He holds a BS in accounting from the University of Kentucky and a BA in journalism from the University of South Florida.
