Why I Was 100% Wrong On Gold
"The gold hater."But Joe, you can't rest with just saying gold is acting like a high beta stock. You have to explain why. And for that you have to go back to the Fed's money printing.
That's what Robert Wenzel of EconomicPolicyJournal calls me, and a lot of commenters here feel the same way because over time I've voiced skepticism about the role of gold in a modern monetary system, and I don't have a blood-curdling hatred for the Fed.
Of course, the recent slide notwithstanding, it's been a steady march higher for the yellow metal, and full-on gold bulls have been rewarded handsomely (Disclosure: I own some of the GLD ETF).
And to be fair, the gold bulls have had an excellent line of logic on their side: As the world's biggest economies get mired in deflation, the pressure increases on central banks to expand the money supply, with *spit* fiat currency in the world, the appeal of a 5000-year old form of "hard" money only grows.
Add in huge demand from the developing world, diminished supplies, low carrying costs, and voila, gold should go up. And it has!
So where did I go wrong? After all, all those pro-gold arguments make a fair amount of sense.
The problem is, I misunderstood the real nature of the real way the precious metal is trading. It's a high-beta stock.
You can read the rest of Joe's comment here.