- why gold is a currency;
- why Europe is much worse off than we are; and
- the potential bottom in oil and gold stocks.
Gold Is a Currency Posted at 3:55 p.m. EDT on Friday, June 1 We have made up our minds with this employment number that nothing's safe, which, alas, has people buying gold. Remember gold? I think this move tells you that sometimes the market's just wrong. We have heard endlessly that gold is no longer any good, that it has lost its luster and that it is not an investment and that it is anything but safe ... and then we get today and suddenly "of course it's the safe haven." > > Bull or Bear? Vote in Our Poll I have always found this not-safe-haven talk to be extraordinarily wrongheaded and have always felt the need to defend gold, even though it does not need defending given its 11-year record of gains. But the reason I defend it shines on a day like today. I constantly refer to gold not as a commodity or a precious metal, it is a currency. And right now all currencies are under assault from each other. The Europeans need the euro down to stay competitive. The Chinese have been subtly revaluing their currency down to regain export power. And the U.S.? After today's employment number we are reminded that the safe haven that is the dollar isn't safe at all, except politically. Without growth -- and this employment number calls our growth into question -- we're just another deadbeat country that has spent too much with little opportunity to grow our way out of our hole. As long as actual interest rates, real rates, are low, as long as paper currencies can't be backed up by the finances of the countries that print them and as long as we keep having a hard time finding the stuff gold will do just fine. There are periods where we have been lulled into thinking that gold's just some sort of speculative nuttiness (witness the recent head slam Warren Buffett and Charlie Munger put on gold at the Berkshire Hathaway (BRK.A) annual meeting).