My proof that we’re still not close to the end of the current bull market relies heavily on the fact that practically no one in the mainstream media understands gold even a little bit.
And this proof can be found everywhere. Even among the news sources I consider the best and most reliable, the falsehoods about gold are rampant.
On Sunday, the Financial Times published a piece on gold that, I assume, is supposed to be pro-gold, titled, “A case for the 6,000-year-old gold bubble.”
And in this piece several quotes stand out as arguably false, if not completely wrong…
“Gold is, after all, a wholly speculative investment which yields no income.”
“[Gold is] a metal with no intrinsic worth…”
I’m especially disappointed because the FT is by far my favorite financial news publication. I think they do the best job in accurate and insightful financial reporting – frequently scooping The Wall Street Journal on hard-hitting and complicated news – and often carry the only story on a given topic.
But think about the implications of a major global financial newspaper not understanding one of the world’s oldest and most important money assets.
It’s a signal that most market participants STILL don’t comprehend the real story of gold’s antagonistic relationship with other modern currencies.
The overwhelming majority of investors and consumers in the world right now share a common flawed belief. They believe the dollar and U.S. Treasuries are safe.
And they believe that gold is not money.
We don’t have to go too far back in time to remember a similar circumstance – where an asset was largely misunderstood by most market participants.
Remember the housing crisis? Same recipe, different asset.
Nearly everyone (even Ben Bernanke) believed that houses could ONLY go up in price. That assumption let everyone behave in a way that in retrospect seems highly foolish.
Because now we know that, of course, real estate prices can go down.
And today, everyone (even Ben Bernanke) sees gold as a curious old-fashioned piece of tradition – not money. They see this new form of money (paper) as the real deal.
And, like real estate, they’re letting their assumptions about the safety of paper let them make a variety of other dangerous assumptions.
When the bottom falls out of the dollar, all of these other assumptions will fail spectacularly in a fashion that will dwarf the housing crisis.
Because this time, it’s not just housing. It’s the entire house of cards.