Why Invest in Gold Now

Why invest in gold? After all, it's in a bubble, right? You don't want to invest in another bubble now, do you? After all, even a genius like George Soros said that gold is in a bubble. Of course, he's invested hundreds of millions in gold himself.

Yes, you read that right. George Soros has invested hundreds of millions of his own money in gold - and still he's been quoted as saying that gold's in a bubble.


Now maybe you're one of those folks who don't particularly like Soros. He's a bit of a controversial figure. Okay, then how about John Paulson? Don't know Paulson? He's that hedge fund manager who famously made I think it was $3 billion betting that we'd have a subprime mortgage disaster. And, of course, he was right. Anyway, Paulson put a big chunk of those billions into gold.


The list goes on - at least the if the list includes sophisticated investors who invest lots of money - more specifically their own money.


You see, when it comes to professional investors, you've got the ones who put their money where their mouth is and you've got the ones who don't. Soros and Paulson are the kind who put their money where their mouth is. They've invested in gold and aren't shy about it.

The other ones - the ones who don't put their money where their mouth is - aren't investing in gold. They're a whole different breed of investment professional. They invest "other people's money." There's an acronym for that: OPM. They typically work for large (and not so large) institutions. What they do reminds me of the saying that old-timers tell you about the typical broker: they don't buy their own BS. That's why out of all the money "professionally" invested out there, there's only about 0.7% of the total invested in gold. That's it. Trillions (I think it's up around $55 trillion) invested, but only about $400 billion invested in gold and ETF's that represent gold, and gold mining shares. Just a drop in the bucket.


So maybe you were considering investing in gold. And if you were, maybe you're asking yourself if or why you should invest in gold now. And maybe you were noticing that gold is a bit "overbought" as we say in the business (that means the price might go lower temporarily on a "correction" in the price in the coming weeks). So if that's the case, if you were wondering about investing in gold, but still don't know why you should invest in gold, try thinking about who's investing in it now.


Think first about those sophisticated, rich investors who've obviously bought some. (After all, someone's been buying it the last ten years and driving the price up - and it's probably not the guy next door.)

Or you might want to think about the investment professionals like Soros and Paulson who've actually put a boatload of their own money into it. And then you can think about the ones not investing - the investment professionals who just invest OPM, other people's money. They're the ones who aren't investing.

Who's opinion would you go with here?

Oh, and as far as Soros saying that gold's in a bubble, I think it's just him wanting to keep you out so you don't drive the price up too quickly if you were to decide to start buying. He doesn't want that just yet, since he's probably looking to buy more. That's how guys like Soros operate.

As for Paulson, I don't know the man, but he did just make a speech at a famous New York City club - standing room only - where he talked about how he's invested in gold and why he thinks it's a good idea.

Look, I'll talk more about gold in the future. Just think about what I'm saying here and chew on it for a while. It might help you answer that question: "Why invest in gold?", or maybe even "Why invest in gold now?"

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