The Gold Blog

Peter Schiff was interviewed by Jon Stewart last night on the parody news show ‘The Daily Show’. I say parody, but it is generally acknowledged to be more informative than most mainstream news (surveys consistently point out that people who get ‘most of their news’ from The Daily Show are more informed than those who get their news from other sources).

Perhaps it is apt then, that the parody news anchor started with clips of Peter Schiff being laughed at and heckled as he warned of the impending recession way back in 2006 and 2007. This has struck quite a nerve, possibly because due to the arrogance of the market propagandists that said that the housing market would keep rising for ever ad infinitum; and besides everyone likes a good comeuppance. For example this youtube video entitled ‘Peter Schiff Was Right’ has 1.3 million views and counting.

Peter is right in saying that aside from the strategy of dealing with the immediate ‘credit crunch’ crisis (he believes no company is too big to fail), that the US needs to make a fundamental shift in the way the economy is structured:

we have to produce more and consume less

Unfortunately he does not seem to hopeful that this can be done in time and he is on the record saying that that gold will rise as the dollar collapses:

We had this economy that was based on Americans borrowing money and then spending it on products. We have this huge debt finance bubble which is collapsing, and it’s being supported by foreigners.

But when this artificial demand for Treasuries goes away, the Fed is going to try to print a lot of money and the dollar is going to get killed.

Video follows:

David Booth discusses the importance of balancing volatility risk and purchasing power risk when investing for retirement. He explains that investing in cash through Treasury bills, has not produced the real returns (i.e. after inflation) necessary to preserve living standards over the long haul, and illustrates how investors can manage both types of risk through an appropriate commitment to and investment in the stock market.

Ken French Professor of Finance at the Ivy League  Dartmouth College explains why active investing is always a negative sum game.

We often hear that now is a good time (or a bad time) for active investing.That does not make sense.

In aggregate, active investors always underperform by their fees and expenses.

Gold & Silver Investment’s very own Marc Westlake was in the news recently, when he pointed out that Gold has been outperforming Berkshire Hathaway from at least 2005.

It seems to have made quite a stir, and was discussed on Bloomberg news last night:

Bloomberg have covered our recent research concerning Warren Buffett’s Berkshire Hathaway poor performance versus gold in recent years.

Buffett is undeniably one of the most successful investors in the world and his investment approach is well known. Buffett attempts to pick winning companies in a concentrated portfolio of stocks. Our view, and that of other economists who subscribe to the efficient market hypothesis, is that Buffet has been extremely lucky over the years with his stock picks but that for most investors, attempting to pick winning stocks is a poor investment strategy. Even Buffett himself doesn’t claim to be able to pick hundreds of winning stocks, maybe just one or two a year and on several occasions Buffett has said that investors are better off with an index fund. Continue Reading »