Following last week’s emergence of gold on two of my main models, and last week’s note on the sudden weakness of credit growth…..
… it is clearly time to reconsider gold strategy and allocation. How important is gold? What is the appropriate strategy for you? How do I buy gold?
There are different answers for everyone, but the key to answering those questions stems from a deep understanding of gold’s place in the universe of investment alternatives.
Indeed gold should arguably be the starting point for all investment strategies. Gold has been at the origin of finance well before there were stocks, bonds, derivatives, or bitcoin.
J.P.Morgan put it simply as shown above.
Simply put, gold lies at the heart of historical human experience, whether social, legal or financial. The United States Constitution declares, in Article I, Section 10, “No State shall… make any Thing but gold and silver Coin a Tender in Payment of Debts”.
Aristotle’s principles for the ideal form of money supported gold as money. Gold had established its key function well over a thousand years before Aristotle.
Has gold now been replaced by modern developments which make it irrelevant now? Or does the durability of its role remain untarnished? Decide for yourself.
Roy Sebag of Goldmoney writes:
“The Code of Ur-Nammu is arguably the most important piece of factual history we have evidencing human cooperative systems which, at the margin, functioned much like the present. Let us review the prologue of the code as it was written verbatim 4,100 years ago:”
“…After An and Enlil had turned over the Kingship of Ur to Nanna, at that time did Ur-Nammu, son born of Ninsun, for his beloved mother who bore him, in accordance with his principles of equity and truth… Then did Ur-Nammu the mighty warrior, king of Ur, king of Sumer and Akkad, by the might of Nanna, lord of the city, and in accordance with the true word of Utu, establish equity in the land; he banished malediction, violence and strife, and set the monthly Temple expenses at 90 gur of barley, 30 sheep, and 30 sila of butter. He fashioned the bronze sila-measure, standardized the one-mina weight, and standardized the stone weight of a shekel of silver in relation to one mina… The orphan was not delivered up to the rich man; the widow was not delivered up to the mighty man; the man of one shekel was not delivered up to the man of one mina.”