Hammer Time: Gold is Too Legit to Quit
Gold: Too Legit to Quit
From the backwaters of marginalization and ridicule to the front pages of reluctant acceptance, gold has endured a very gradual ride to full-fledged legitimacy.
At the top of Fortune Magazine's list of the 100 Fastest-Growing Companies for 2010 sits none other than Eldorado Gold (NYSE: EGO).
In a real sign of the shifting tide, The Wall Street Journal recently echoed my long-held contention that gold is not adequately understood when it is viewed as a commodity. The article detailed that gold price movements are significantly more correlated with the U.S. dollar than inflation.
China moved briskly this week to prove that this recent policy directive regarding gold was more than words on paper. The state-owned China National Gold Group (CNGG) is using Vancouver-based China Gold International Resources (in which CNGG is already a 39% stakeholder) as a conduit for consolidating assets outside of China, beginning with a $742 million transaction involving a copper mine in Tibet that features gold and silver by-product. CNGG is the same entity that inked a gold supply agreement with Coeur d'Alene Mines (NYSE: CDE) in June, and is the leading gold producer in China.
People take time to wake up to a new idea; even if that new idea is as ancient as gold's reign as a medium for exchange. I will close with a pair of quotes from former Fed Chairman Alan Greenspan. The first quote is from 1967, and the second is from 32 years later, in 2009:
"Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights."
"What is fascinating is the extent to which gold still holds reign over the financial system as the ultimate source of payment."
Gold's legitimacy was never lost; it was merely forgotten, ignored, and then grossly misunderstood.
Okay Fools, extra credit for anyone who can identify from this article the most bullish prospective investment I've encountered since Primero Mining. :)