Subscribe FOR ALL ACCESS TO Nichols On gold
Follow Us on Twitter

Latest Commentaries

Gold: Now is the Time

If investors ever needed physical gold in their portfolios, now is the time.

Now is the time to protect even a well-diversified portfolio against the risks inherent in financial assets (equities, debt) and tangible assets (real estate, fine art, etc.) alike. Here’s some reasons why:

  • If you hadn’t noticed, geo-political uncertainties are at a high pitch, what with failed states (Iraq, Libya, Syria) and terrorist victories in the Middle East, East-West Russian roulette in Central Europe, and rising tensions between the United States and China as the PRC seeks to extend its territorial claims in the South China Sea.
  • Economic anemia just about everywhere threatening to sink the world economy into renewed recession . . . or worse. Here in the United States, despite the rosy growth scenario now espoused by Federal Reserve policy-makers and many business-cycle analysts, the outlook remains uncertain with slow growth or even renewed recession threatening.
  • Financial markets are increasingly unstable with many equities overvalued . . . and investors likely to run for the fire exits if central banks dare tighten their “ultra-loose” monetary policies.
  • Greek default and withdrawal from the euro zone are real possibilities despite lots of talk and continuing negotiations between the Greek government and that country’s European creditors.

Any of these “disaster scenarios” could initially trigger a swift tumble in the price of gold as some retail and institutional investors raise cash to cover losses in equity and other financial markets.

But, in my view, any retreat in the metal’s price should be seen as an opportunity for savvy investors to acquire more gold at bargain prices.

Over the long haul, gold is the least risky and potentially most rewarding of all investment asset classes. Indeed, it serves as an insurance policy for private investors, institutional funds, and central banks – an insurance policy protecting holders of the yellow metal from consumer price inflation, U.S. dollar depreciation, asset confiscation, and portfolio volatility.

That’s why America’s most threatening rivals – Russia and China – continue to accumulate gold bullion . . . and hold it at home.

It’s also why some of America’s closest allies – including Germany, France, the Netherlands, Belgium, and Austria – are slowly repatriating some of their gold previously held on deposit with the New York Federal Reserve Bank and the Bank of England.

Gold reserves stored outside a country’s geographic borders, even with such venerable institutions as the Federal Reserve or the Bank of England – once considered risk-free by some central-bank portfolio managers – have been in recent years tarnished by the danger of confiscation and the possibility of economic sanctions as we’ve seen in the past few years.

There’s a lesson here for private investors. That’s why I advocate one’s “core holdings” – perhaps five-to-ten percent of your investment portfolio – be held in physical gold held under one’s personal control just like a nation’s official reserve holdings . . . and not in paper substitutes such at exchange-traded funds, depository receipts, mining equities, etc. These vehicles may make sense for some investors some of the time – but only after one’s core holdings are established as the ultimate form of financial insurance.

Waiting for the Start of Something Big

We've said it before, but its worth repeating:  A reassessment of U.S. economic prospects – and revised financial-market expectations of prospective Fed policy – sometime in the next few months could support a spring-summer recovery in the price of gold, lifting the yellow metal up and out of its recent trading range.   Until that happens, gold ...

Gold: Stuck in the Mud . . . But For How Long?

A reassessment of economic prospects and Fed policy in the weeks and months ahead could be just the turn of events that will support a springtime recovery in the price of gold, lifting the yellow metal up and out of its recent trading range.   Gold prices have been stuck in the mud, trading in recent weeks mostly between $1,175 and $1,225 an ...

Please Login or Subscribe to view this Commentary.

Economic Growth, Fed Policy, and the Price of Gold

From day to day and week to week, short-run fluctuations in the price of gold have, of late, been driven almost entirely by expectations of prospective Federal Reserve monetary policies, particularly with respect to short-term interest rates. In turn, these expectations have been driven by the flow of economic data and the somewhat opaque and ...

Please Login or Subscribe to view this Commentary.

Think Long-Term

Although I expect gold prices to rise sharply by the end of the year, possibly even testing its all-time high near $1924 an ounce, I’m the first to admit that short-term forecasts are highly uncertain. I’m much more confident about the long-term prospects for gold. Indeed, looking out towards the end of the decade and beyond, I believe the ...

Please Login or Subscribe to view this Commentary.

The Dollar Reigns Supreme . . . But For How Long?

Having failed in its attempt earlier this month to move above $1,300 an ounce, gold is once again looking for sustainable support under the technically and psychologically important $1,200 level. How quickly things can change in world financial markets: Just a few weeks ago it looked like gold might break-out on the upside on the back of bullish ...