‘Barbarous Times’ Ahead
Some call gold a ‘barbarous relic,’ after famed economist John Maynard Keynes used this term to describe the gold standard in the first half of the 20th century.
They’re right. Gold is a barbarous relic, but these are also ‘barbarous times.’
When risks outstrip potential returns, you’re more likely to lose money in investing than make money.
You’re willing to forgo returns, or even suffer losses, in order to preserve your wealth.
We’re beginning to see this behavior in the West too. In the last year, we’ve seen negative interest rates in Europe, despite a weakening euro.
As economic growth stagnates in the West, asset price appreciation should also falter. The general investing population may realize that there is no growth, and that once the transitory phase of asset appreciation is over, real positive returns are likely to become scarce.
If investors discover that they are unlikely to earn positive returns on investments in stocks, bonds, or real-estate, the alternative of owning gold will become more attractive.
In a non-growth world, you can’t expect to make money on investments, so you need to look for ways of getting your wealth out of harm’s way.
As we’re seeing in India, gold can shine in these ‘barbarous’ times.