The following is the text of an e-mail I sent today to Subscribers of StockResearchPortal.com. StockResearchPortal.com is a research website that provides coverage on the approximate 1,600 Mining and Oil & Gas stocks listed on the Toronto and Toronto Venture Stock Exchanges.

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According to an article today titled ‘Chicken Little Nouriel Roubini Says Gold Apparently Has No Intrinsic Value?‘, and that Roubini says just that.  Roubini is the New York University economist who is acclaimed for ‘calling’ the current economic malaise, and who writes and edits Roubini Global Economics.  I read Roubini’s commentaries regularly and with interest, as I find his views very thought-provoking.

The referenced article, which to me drips unnecessary and unwarranted sarcasm, in essence says ‘the quietly broadening move towards gold rolls on’ while at the same time ‘gold only rises on the back of runaway inflation in consumer prices…or a wipe-out Armageddon in stocks and bonds’ - and that in the author’s view ‘Those two eventualities would likely push gold sharply higher from here. We might just get them all at once if current trends persist for much longer. Better to take a position ahead of time, you might guess. But no. Not if you’re smart like Roubini’.

The author then says Roubini asks the rhetorical question ‘With no near-term risk of inflation or depression, why have gold prices started to rise sharply again in the last few months?’, and answering it by saying:  ‘Without those extreme events, this fall’s (i.e. last few months) rise in the gold price must be a bubble’.  The article goes on to quote Roubini as saying “When inflation is high and rising, gold becomes a hedge against inflation; and when there is a risk of a near depression and investors fear for the security of their bank deposits, gold becomes a safe haven”.  The author agrees that to be ‘fair commentary’, and then attributes 6 reasons for gold’s continued price rise to Roubini, being:  money printing; bank leverage, the U.S. Dollar, falling mine output, Asian gold hoarding; and the ultimate “too big to save” of government itself.  The article than says Roubini ultimately concludes gold has ‘no intrinsic value’ because at the end of the day the U.S.$ will prevail, and ends with what I think is likely misplaced sarcasm with respect to that view.

I think anyone reading this e-mail ought to click here and read the referenced article in its entirety and in context.  It also is available today to visitors to the ‘Today’s Focused News’ feature on StockResearchPortal.com.

In my view it is all to easy to be a critic.  I suspect Roubini’s view (assuming the author of the referenced article got Roubini’s commentary right) is that for the foreseeable future:

·    the U.S.$ will continue to be the world’s reserve currency;

·    that the U.S.$ as a fiat currency will continue to be ‘best of breed’ in the context of all other world fiat currencies; and,

·    the world will not revert to a ‘gold standard’.

If indeed that is Roubini’s view I am inclined to agree with him - all of which leads me back to physical gold being a good thing to ‘have some of’ in either an inflationary or deflationary environment.
I recommend you carefully read everything Roubini writes that you can get your hands on, and reflect on what he says (not necessarily agreeing with all he says) for the same ‘think for yourself’ reasons I do.

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