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What I told CNN
about gold 1 year ago
Posted By Craig R. Smith On 11/28/2005 @ 1:00 am In Commentary | Comments Disabled
Gold is up 89 percent since 2001, and over 15 percent in 2005!
I expect the next phase of the ongoing bull market in gold will attract millions of Americans who want to understand why gold is becoming the best investment of the 21st century.
Thankfully, gold is still cheap, if you consider its true relationship to the falling value of the U.S. dollar over the last 25 years.
For example, gold’s price peak in 1980 was $850 an ounce then, but using inflation-adjusted numbers the same peak price would be $1,400 an ounce today!
So, with gold at $495 an ounce today – or even at $595 an ounce – it is still a “golden” buying opportunity.
The following is a transcript of what I told CNN about gold one year ago. CNNfn was the only major network to follow the gold rush since 2001 with regular annual interviews.
CNNfn “Market Call with Susan Lisovicz” on “Gold Rush” (Dec. 2, 2004)
CNN: Gold is up 73 percent since 2001 and shows no sign of pulling back. How do you explain gold’s rocket higher?
CRS: A lot of it has to do with the drop value of the U.S. dollar, and a lot of it has to do with the fact that for the first time in many years the world is returning to something that throughout the millennia has been a common denominator amongst nations [gold]. Everybody agrees that gold is money. It has been sought after for thousands of years by various civilizations and now when we live in the age where currencies are fluctuating, there is so much uncertainty gold has become very attractive again.
CNN: Its like back to the future. Are you saying that, basically, investors only in recent years have rediscovered the value of gold?
CRS: It’s interesting that you say that, because I believe that this is the case – that’s why I wrote the book “Rediscovering Gold in the 21st Century.” On my website, swissamerica.com, I go into depth talking about how investors are looking for alternatives when interest rates went to 2 and 3 percent and you couldn’t get returns. Where was the best place to put your money and diversify? Investors have, obviously, most of their money in the stock market, but maybe a little of your money in gold and in a tangible that is increasing in value would make sense. Investors are starting to go back that way.
There was a big article in the Wall Street Journal yesterday, discussing that many people are starting to look at gold again as a small alternative to diversify their portfolio – maybe 5 or 10 percent. There is going to be a big temptation, if you will, for people to put too much money into gold because it has been doing so well, as it relates to return. I would say 5, 10, maybe 15 percent diversification into gold and then the rest in traditional stocks, bonds, treasury bills, money markets, etc.
CNN: So 75-80 percent of the average portfolio should be: stocks, bonds, t-bills – that kind of thing, and then some in gold. Would you say that investors who suddenly get into bullion have missed the big moves higher?
CRS: That is a great question, and I don’t think they have this time. There are many people suggesting that gold could go to $1,000 an ounce. We have to keep in mind the last time gold had this type of run …
CNN: And it’s about $450 now?
CRS: It’s $456 this morning, another 16-year high. We saw the last time …
CNN: When would you see a thousand? In a year, two years?
CRS: Well I hate to predict, because you know how that works. Many people say $1,000 gold is in the future. I think $500 by the end of the year is a very realistic number. I know we are only a few weeks from that, but $1,000 is a very legitimate number. Because, if you remember, the last time it went up, it hit $850. I would caution your viewers, though, there are many ways to own gold, and unless you do it the right way, you could be asking for trouble.
CNN: Can you quickly outline some of the ways you can own gold? I mean there is something as simple as owning just physical possession of coins right? That’s one way.
CRS: Sure and we believe that is actually the best way. Also, gold exchange-traded funds now on the stock market under the symbol GLD that’s actually a representation of the price movements of gold, but you really don’t own the gold, but it’s another way to go. Gold shares have been doing incredibly well if you’re in the stock market.
CNN: Mining is that what you’re talking about?
CRS: Sure, Newmont, Barrick, I don’t want to give anyone a particular endorsement.
CNN: Do you own any of the stocks?
CRS: No I do not own any of them. But I do own the personal, physical gold, and I must tell you if I look at my portfolio, my real estate and my gold over the last three years has done nothing short of explode. I think you’re going to see that trend for sometime to come.
CNN: That’s interesting, real estate and gold – two very tangible things – right! Thank you, Craig Smith, CEO of Swiss America, author of “Rediscovering Gold in the 21st Century.”
Watch “CNN Rediscovers Gold with Mr. Smith” for an overview of the 21st century “Gold Rush.”
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