Irrational Resistance to Gold Continues to Dominate Group-Think

Precious Metals:

The Naysayers are Getting Louder and Louder

An irrational, impervious-to-facts group-think mentality continues to dominate “mainstream” U.S. investment advisors and planners. But, we shouldn’t complain.
The prevailing flood of disastrously wrong mainstream advice is one of the reasons Independent Living News continues to be the country’s largest and fastest growing financial and self-reliance intelligence advisory.
Most “investment advisors” remain firmly entrenched in the now-broken investment model of the past three decades of debt-driven consumption. Most appear unaware that market forces are slowly crushing the money-creation prosperity on which their know-how is based.
When Smart People
Wrap Their Heads around a Broken Model
Consider the much-ballyhooed Orlando-based investment firm Resource Consulting Group. Its leader, Kimberly Sterling, has been a darling of the establishment media. Her specialty is being a financial advisor to some of the nation’s most prominent doctors and sports celebrities.
Sterling was front and center in an Orlando Sentinel article – widely picked up in financial pages of newspapers all over the country – which ran up the tattered flag of mainstream financial planners who continue to “pooh pooh” investing in gold and silver.
The article states: “At least one-third of Kimberly Sterling’s clients have sought her advice in the past year about gold. The Orlando financial planner has successfully discouraged all but one of them from doing so. That one investor insisted on having some gold in his portfolio, she said, despite her warnings. Eventually she referred him to a gold commodities exchange-traded fund that has done well during the metal’s decade-long run-up in price. But her firm, Resource Consulting Group, still wouldn’t buy it; it would only make the referral.”
Sterling’s “buy-the-damn-gold-yourself” reaction comes as no surprise. If you’ve ever tried to convince your broker to get you into gold and got a lot of bugle-oil about it being a bad idea, you are probably not surprised at the haughtiness Kimberly Sterling’s gold inquirers routinely encounter!
Irrational Group-Think vs. the Facts
We bring this up not to pick on Kimberly Sterling, but to demonstrate the irrational group-think that seeps into the thinking of very smart, very successful people.
Unfortunately, all the intelligence in the world won’t help you if your strategic mind is still locked into an economic model that is no longer operative.
Not to pick nits, but a cursory review of Sterling’s website unveiled a 2005 paper on how to properly invest in to the then-booming real estate sector. Among Sterling’s brainstorms was for her flock to sink money into Real Estate Investment Trusts. Another gem was a suggestion that her clients get into “managed pool” and other “instruments” designed to cash in on the real estate boom.
We did not find evidence that Sterling told her investors to evacuate REITs before the carnage (which appears to be far from over). But it hardly matters, as people who understand economics like Peter Schiff correctly labeled real estate a dangerous bubble well before she was encouraging her hapless clients to jump into the market.
Recent developments concerning precious metals are worth mentioning given the impervious-to-facts mentality of so many financial advisors who continue to insist gold is a lousy investment:
  • Central banks have become net buyers of gold for the first time in decades.
  • After publicly trashing gold, even pro-Obama leftist George Soros quietly doubled his already significant position in the precious metal. The publicity-loving Mr. Soros has chosen to go on “silent running” when it comes to media inquiries about his major new gold position.
Probably one of our proudest moments came at the depths of the 2008 deleveraging panic — a global margin call of financial institutions. As both good and bad assets (including gold and silver) were desperately dumped into the market in a massive value-killing flood, virtually all asset classes crashed.
The Independent Living News editorial team correctly diagnosed the 2008 incident on the spot – not as a deflationary plunge, but as a massive deleveraging episode with deflationary symptoms. And just as we predicted, the Federal Reserve and government stepped in to prop up the market with trillions of dollars in new money and guarantees.
Meanwhile, one of our competitors who had been beating his chest about a deflationary collapse went so far as to tell his readers to sell the U.S. stock market “short” when it was already very near its bottom in March 2009. Big mistake.
At the height of the crisis when the dollar shot up during the global liquidation event, we advised Independent Living News subscribers in October 2008 to buy at what later proved to be the exact bottom. We titled the front-page feature article “Battered Gold and Silver Market Poised for Dramatic Comeback.”
Sure enough, aside from artificially-pumped-up U.S. government bonds and the dollar, gold was the only major asset class to emerge in 2008 with a gain (6%). Those who bought gold during the deleveraging panic of 2008 are now smartly up 50 to 60%. Those who bought silver are up over 100%!
When will the “mainstream” financial group-thinkers wake up and start recommending gold? We’re not sure, but it will probably be a time to start lightening up on our holdings!
Stay tuned for these and other developments from your friends and fellow investors-in-the-trenches at Independent Living News!