Below is Fitzwilson’s exclusive piece for KWN:

“We have seen some very fine discussions this week about the short-term technical and fundamental situation for gold.  We thought it might also be useful to take a bit longer view of the situation as well as explain why people are frustrated with their investment allocations and the advice they have been receiving main stream financial advisors.

Below is a ten-year look at the price of gold.  If you put your finger over the name in the upper-left corner of the box and showed the chart to any investor, they would immediately want to know the name of this amazing investment.  It is also evident that the “volatility” that is constantly associated with gold is a complete falsehood, at least for those with any kind of medium- to long-term time horizon.  It does not get any better than this in our opinion.  An investment that advances 6-fold with such a steady ascendancy is every investor’s dream.

Source: Reuters

Now take your fingers off of the name.  The person to whom you showed it often will recoil and say “oh…it is gold!”.  No matter how well gold performs, there is a palpable aversion to it by most people.

Why is that?  There are many reasons.  The first is that gold is garlic to the fiat money system vampire.  To maintain the ability to print money out of thin air as well as prevent (postpone) a collapse of historic magnitude, the word must be spread that gold is barbaric, doesn’t have any intrinsic value, etc.  You have likely heard all of them, particularly if your source is the main stream media.

The second reason is that gold is not an “established” asset class.  The vast preponderance of money is being advised by groups known as consultants.  When consultants are hired, a key goal of their service is making everybody look like everybody else....

Continue reading the Robert Fitzwilson piece below...  


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“This has to do with conformity that minimizes the chances of being sued for the plan sponsor.  That is why we see the ubiquitous recommendation of a 60/40 split between equities and fixed income, regardless of the states of the stock and bond markets.

A third reason is that the precious metals universe is relatively tiny, particularly silver.  For gold, the constraint is the marginal supply which is very small relative to the demand by governments and the extraordinarily wealthy individuals.  If you are managing a $100 billion portfolio, you cannot acquire enough metal and stocks to have more than a token allocation. 

Institutions will wait until prices rise significantly from current levels.  In that manner, the valuation of the sector will allow the managers to have that significant allocation.  In other words, their institutional size precludes a buy low strategy that is common sense.  One of the reasons for the hockey stick finale at the end of the cycle is that institutions will finally jump on board.

In talking with many King World News readers, there is universal frustration that their current financial advisors are refusing to initiate or build up allocations to the metals and the miners.  Part of that is generational bias.  Most people in the investment business are not old enough to remember the ‘70s.

A more powerful component is institutional bias.  The vast majority of advice is being rendered from institutions whose business is asset gathering.  Their business model is moving assets upstream in their organizations to cookie-cut strategies that are influenced by consultants.  There is little or no incentive for your financial advisor to adopt allocations to metals and miners.  It could be career ending if they did lobby for such a change. 

I recall that James Dines began his illustrious career after being dismissed for recommending gold at $35 per ounce 40 or so years ago.  However, it was a fortunate event for the rest of us who follow his work, but it shows how ingrained the bias has been against gold.

Take heart.  It is not you.  Listen to common sense and your own instincts.  Be prepared for this global financial mess to take more time than you think.  We are many magnitudes away from the ultimate resolution of this tragic financial soap opera. Know that only a small percentage of investors are focused on this form of wealth preservation.  So wise investors should continue to accumulate gold and silver. 

© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

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Eric King

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© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast,

rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

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