11/17/09 Stockholm, Sweden – Richard Russell has identified six reasons for why the price of gold is likely to head higher. Here’s a highlight from each of the explanations…
1. With interest rates near zero there’s basically no opportunity cost to choosing to buy gold over Treasuries.
2. The Fed is going to keep building debt, and will eventually cause “world-wide central bank inflation as the banks seek to devalue their money in an effort to keep the dollar strong.”
3. In a departure from their usual routine of selling gold, central banks around the world are now net buyers of gold. They are looking to shield themselves from the weakening dollar.
4. Countries are increasing the amount of gold in their reserves. On the one hand, developed nations like Italy and France hold 66.6 percent and 70.6 percent, respectively, of their reserves in gold. On the other hand, nations like Russia and China only hold 4.3 and 1.9 percent of their reserves in gold. Developing countries have an easy justification for growing their holdings.
5. Few people in the US own gold. In fact, many seem more inclined to sell jewelry through services like Cash4Gold.
6. Lastly, only a few nations, like China, are encouraging citizens to buy gold for personal savings. There’s plenty of room for buying by the public to increase. As Russell pointedly puts it, “most Americans have never seen a gold coin.”
The six reasons are presented in their entirety on The Pragmatic Capitalist in its post on why Richard Russell wants to own gold.
Rocky Vega
Rocky Vega is publisher of The Daily Reckoning. Previously, he was founding publisher of UrbanTurf and RFID Update, which he operated from Brazil, Chile, and Puerto Rico, and associate publisher of FierceFinance. He specialized in direct marketing at MBI, facilitated MIT Sloan School of Management programs, and has been featured on CBS. Vega graduated with honors from Harvard University, where he was on the board of Let’s Go Publications and directed business programs involving McKinsey, Goldman Sachs, and Harvard Business School faculty. He is also enrolled at the Stockholm School of Economics.
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Rocky,
are you ever going to actually write something on these threads or just regurgitate some other news story from some other corner of the wed VERBATIM? Don’t get me wrong I like what you post sometimes but often Ive already read it right from where you read it too.
… even I could do that