David Cottle: Gold has humbled smart men before


By David Cottle
The Wall Street Journal
Monday, February 13, 2012


It takes a brave man to suggest that Warren Buffett has missed a point. After all, unless you are Carlos Slim or Bill Gates, a comparison of his bank balance and yours will show that he caught quite a few that you and I saw only when it was far too late.

However, as Mr. B rails against gold in an article for Fortune magazine --


-- it's tempting to think that he just might have it wrong when it comes to the oldest haven of all. He mounts all the attacks that exasperated non-gold-bugs often go for: The stuff has no inherent value, it underperforms stocks horribly over time, and has merely become a self-inflating bubble in its long climb to record highs.

Perhaps he's right, but, in its enduring relationship with mankind, the yellow metal has a history of humbling very smart people.

... Dispatch continues below ...


Golden Phoenix Discusses Royalty Mining Growth Strategy
on '21st Century Business' on Fox Business Network

Golden Phoenix Minerals Inc. has discussed its royalty mining growth strategy on the Fox Business Network program "21st Century Business" with host Jackie Bales. Golden Phoenix's director of corporate communications, Robert Ian, told how the company narrows its focus to project generation and future royalty streams. He explained why Golden Phoenix believes it's better to own joint-venture interests in several producing mines instead of full exposure to just one project.

"21st Century Business" has been airing for 15 years. Previous hosts have included Gen. Alexander Haig, Gen.l Norman Schwarzkopf, and Secretary of Defense Caspar Weinberger. Golden Phoenix appeared as paid programming on this broadcast.

To view the program with Golden Phoenix, please visit Golden Phoenix's Internet site here:


John Maynard Keynes denounced the gold standard as a barbarous relic. Soviet Marxists dreamed of the day when gold would be consigned to the scrap heap, literally and figuratively, useful only for lavatory fittings.

Closer to our own day, it's still fashionable to snigger at Gordon Brown's decision, when U.K. chancellor of the exchequer, to sell off British gold in favor of paper assets between 1999 and 2002. Gold prices were at 20-year lows back then, primed as we now know for a record upward charge.

So please, be my guest and snigger away. But Mr. Brown didn’t make this decision alone. The doctorate-garlanded staff of Her Majesty’s Treasury went along with it too.

And now Keynes is gone, the Soviet Union too, and even Gordon Brown seems to have disappeared. But here's gold, all yours for $1700 odd per ounce.

The reason investors like gold is not because they hate stocks or real estate or anything else. It's high because the word of governments is in disrepute as it hasn't been in living memory.

Across the developed markets, bonds and currencies have been debauched to cover debt. Even claims on the U.S. Treasury aren't the rock solid bet they once were. They may be in practice, of course, but in theory it's a different matter. The U.S. is no longer "triple A," and it's still wrangling over a budget that is going to need "Greek-style" cuts to make spending sustainable.

Top credit ratings are now the preserve of smaller, less liquid economies. The world's investors simply cannot pile into Australian or Scandinavian bonds in the same way they used to run for cover in the Treasury market. There aren't enough of them.

Gold may well annoy the likes of Mr. Buffett, and swashbuckling investors everywhere, who will probably continue to reap better rewards elsewhere. Good luck to them.

But in a world short of trustworthy governments, gold will remain a more important and permanent part of portfolios than it was in the pre-crisis days of innocence.

* * *

Support GATA by purchasing DVDs of our London conference in August 2011 or our Dawson City conference in August 2006:


Or by purchasing a colorful GATA T-shirt:


Or a colorful poster of GATA's full-page ad in The Wall Street Journal on January 31, 2009:


Help keep GATA going

GATA is a civil rights and educational organization based in the United States and tax-exempt under the U.S. Internal Revenue Code. Its e-mail dispatches are free, and you can subscribe at:


To contribute to GATA, please visit:



Be Part of a Chance to Discover
Multi-Million-Ounce Gold and Silver Deposits in Canada

Northaven Resources Corp. (TSX-V:NTV) is advancing five gold and silver projects in highly prospective and politically stable British Columbia, Canada.

Check out the exploration program on our Allco gold/silver project :

-- A large (13,000 hectare) property, covering more than 15 square kilometers of a regional mineralized trend just 3km from a recently announced 1.2-million-ounce gold and 15-million-ounce silver deposit.

-- The property hosts historic high-grade silver workings and many mineral showings as well as former mines at the property's northern and southern boundaries.

-- A deep-penetrating airborne geophysics survey has just been completed on the entire property and neighboring deposits and its results are eagerly awaited.

To learn more about the Allco property or Northaven's other gold and silver projects, please visit:


Or call Northaven CEO Allen Leschert at 604-696-3600.