Gold Is One Commodity Buffett and Bernanke Just Don’t Understand

NEW YORK (TheStreet) -- The Royal Mint gets it.

Because I see such deep value in gold today, I was exploring various national mints last week, looking to buy some bullion -- maybe some Austrian Philharmonics, some Canadian Maple Leafs or a few Britannia's from the U.K.

And while reading through the bullion site for Britain's Royal Mint, I came across some highly unexpected commentary.

While the likes of Ben Bernanke, Warren Buffett and others here in the U.S. offer inane commentary on the uselessness of gold, the 1,100-year-old Royal Mint had this to say:

  • Gold is the ultimate store of value.
  • Gold is the original and still the most far-reaching global currency.
  • Gold is perhaps the ultimate form of insurance.

And, yes, the Royal Mint put those words in boldface.

That should tell you something -- namely that gold bullion, at today's lower prices, is an asset you should be adding to your portfolio.

What They're Saying About Gold

Buffett once famously said that gold "has no utility. Anyone watching from Mars would be scratching their head" over the Earthlings and their fascination with a metallic element. Meanwhile, former Fed head Bernanke once told Congress that gold is not money and it is just a precious metal -- the price for which "no one really understands."

Apparently, the Royal Mint understands.

While gold is too-often denigrated at the higher levels of American finance, those who have a long, long history with money, currency and metals recognize that gold is the ultimate form of money.

"Gold," as the Royal Mint notes, "cannot be faked, printed or inflated. Over the very long run, it has historically held its worth." Can anyone make that claim about the dollars in our wallet -- or any other currency that has come along in the last few hundred years? Our buck has lost more than 95% of its value since the creation of the Federal Reserve, and is down 25% since September 2001, what I argue marks the end of the American empire as we once knew it.

I write all the time about the benefits of owning gold in a portfolio. It's insurance against dramatic geopolitical turmoil, it's insurance against rapid inflation, and it's insurance against Congress or the Fed doing something that undermines the dollar's purchasing power either overtly or, more likely, covertly.

I pound the table on the necessity to own gold -- physical gold -- because I believe the stories of history far more than I will ever believe the theories of Warren Buffett or any Fed official.

For Now, Gold Is Cheap

Gold is down at the moment, but that doesn't mean much beyond the obvious -- "gold is cheaper than it has been in years."

Every asset class ebbs and flows. That's normal. But for whatever reason, gold's decline elicits all kinds of "death of gold ... I told you so" commentary for a crowd that still (wrongly) thinks of gold as just another commodity rather than the currency that it is.

Just because gold prices have come off their high does not even remotely imply that the metal's day is done. It just means that the dollar is stronger for temporary reasons and, as a result, the world's ultimate currency -- gold -- is down relative to the dollar.

That's how it should be; every currency in the world moves relative to one another.

When the dollar's rally concludes - and I guarantee with 100% assurance that it will -- gold's direction will reverse.

As the Royal Mint concluded, "Gold is, indeed, a unique, irreplaceable asset."

It will insure your wealth and your purchasing power from a rash of economic, geopolitical, Congressional and financial risks that lurk just beyond the horizon.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage. 


 

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