Matt read my China/Gold blog yesterday and told me that he "just doesn't get" gold investing. And I'm sure many of you are with him. But I know as well that there's a big pocket of "goldbugs" among index investors.
To me gold is even more controversial than the broader range of commodities investing that has become all the rage among asset allocators. Why? Because gold has always felt a little like betting on the "don't pass" line in craps (betting with the house) and a little, well, looney.
But my view is that it's done very well in hard down markets, and that's what we could be looking at here. So what harm could there possibly be in that small hedge? Add that to the fact that the global economic climate could favor an insane squeeze on an incredibly limited resource, and that small allocation could end up paying big dividends.
I'm ready for all of Matt's arguments about a "silly shiny metal" having "no intrinsic value" etc. Gold (like other commodities) can't work or have growth built into its return, etc. In response, I think that currency is almost equally taken on faith (at the very least it's wildly arbitrary in how it prices - or is it just me who thinks that?)
So bring it, Matt. I'm ready to step up to the plate to defend gold. Even if I have to do it from my bunker in South Dakota. And I'll bring in Schoenfeld too if I have to. It looks like you've already handed me China.