Why you need gold in your portfolio
Global currencies are losing value, miners aren't finding much new gold, and the Fed has no good news.
The race to debase. That's what's fueling gold right now. The desire of almost all countries in the world -- from Japan to Switzerland, from all of Europe to the U.S. -- to get their currencies down in order to export their way out of the worldwide economic slowdown.
When everyone believes in a weak currency, you need a strong currency, and the strongest currency is gold.
I have liked gold for years and years, mostly as a hedge to the chaos and a belief that it is way too hated as an asset class. I base that view on the notion that gold represents about 1.55% of the world’s portfolios, down from about 5% historically.
That's only one reason to buy, though. We have also seen emerging middle classes around the world purchase gold as a way of passing on wealth or showing wealth, as is the case in the upcoming Indian wedding season. We see wealthier central banks buying gold in order to keep a store of assets that can't be debased by governments.
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Now we are also seeing a stunning decline in the ability to find more gold as one gold miner after another falters in its attempts to extract gold from the earth with any ease or precision, despite the meteoric rise of the precious metal.
You would think these big gains would bring about scads of old gold mines reopening and all sorts of new prospecting, but it just hasn't happened. And outfits such as Agnico-Eagle Mines (AEM) and Goldcorp (GG), once considered among the best in the mining business, have faltered badly.
But nothing is more powerful when it comes to raising the price of gold than a Federal Reserve chief, about to speak in Jackson Hole, who can't possibly offer any reassurance of anything but a weak dollar. Whether he does QE3 or pledges just to stay easy, gold can go higher.
Now, I tend not to like parabolic moves, one where anything goes straight up, as gold has. But I also feel that people still do not own enough gold. I think that it can go higher, but when the exchanges boost margin requirements -- and I said when, not if, because the recent hike failed to deter buyers -- you are going to get a hiccup.
Rather than tell you to sell gold if you already have it, what I would prefer is that those who own less than 10% gold as part of their portfolio allocations boost it, through the SPDR Gold Shares (GLD), to above 10%. Those who now have it as more than 20% of their assets, because of price appreciation, should be trimming, but only down to 20%. It is too precious to be anything but overweighted as the ultimate currency for a time when currencies are losing their strength around the globe.
At the time of publication, Cramer had no positions in stocks mentioned.
Follow Cramer's trades on Action Alerts Plus.
Buying high on the bubble is always a sure way to loose your money .
Jimmy I bought( auy )a few weeks ago now I have to sell , the next green and I'm gone ,thanks for all you don't do or know. Jimmy you need a new gig.
dumbo is the greatest at yelling about what has already happened(ie he loves gold at 1900)
here are some tips.........he called himself dr. unh at one time.......unh went DOWN
he recommended his hedge fund buddy lampert at shld.......shld went DOWN
he touted nyx as his stock of the year at 90 and nyx went DOWN(to 25)
he said scale in to nyx at 60 and it went DOWN
he picked aa as his best performer of the dow this year....time is running out and it is way DOWN
THE KEY IS WHEN HE REALLY COMMITS TO A PICK THAT IS WHEN YOU SHORT HARD
and the strongest currency is gold.
*Gold is not a currency*
Sheesh cramer. I thought you went to school.
Take a look at a long chart of gold in the era of capitalism (1700s on). You will find that gold basically stores value over time and that is it. Adjusted for inflation, it's an object that retains it's value. That is all.
In certain times, it has spiked, only to collapse. In the last century, it spiked 3 times. In the depression, in the 70s when there was stagflation and the financial system was moving away from the gold standard, and today. All three were a function of *emotion* and nothing else.
Now, today, I will agree, for the time being, gold is a good bet. And for what could be sometime to come. But if there's a massive bull market globally say 5 or 10 years from now, the prices of gold will retreat.
We have also seen emerging middle classes around the world purchase gold as a way of passing on wealth or showing wealth,
No cCamer. There are no emerging middle classes in the terms you are remembering from the 1940s-1960s American middle class. There's emerging debtors. And there's emerging wealth classes. The top 10-20% of the emerging economies are the only people benefiting in terms of "wealth"
The average Chinese family for instance, according to the GINI (equality measurement for healthcare, wealth, housing, etc) is worse off today than they were 30 years ago before China began its massive run.
We see wealthier central banks buying gold in order to keep a store of assets that can't be debased by governments.
Wrong Again. Almost every central bank is selling just as much as it is buying. Including China, India, Russia, etc.
The only thing in your post that makes sense is to not over indulge in your portfolio. If you get above 20% by valuation, to trim back.
To BigJoe268. Being stupid has little to do with being a Jew, you racist bubblehead. You're a living example of that.
Cramer's no worse than 99% of the other "money experts" making money from their "shows" and "newsletters" and "commentary". Hell. If they were as much the expert as they want us to think, they'd be sitting with the likes of Buffet et. al rather than at that dinky, phony television set desk.
Almost ALL of them write their little commentaries based on TODAYS news and try to sound as if "they told you so".
Pfah. Do your own research and let the talking heads blow hot air for the neophytes.
He says in your portfolio well if GOLD is in your portfolio it is not in your hand it is still in paper..when the paper money falls you think one is going to easily convert it into real gold in your hand?..it is still paper until you have it in your hand it is not real gold!..
Trust me when the paper money falls the banks funds that say they have "your gold" they are not going to give it to you, those banks are going to pay you in worthless paper money good luck with that people, Cramer has been worthless on what he says, he works for these companies and you can take that to the bank!..look at his track record on you tube.
Gold may not be a currency in Western Countries but in many others it is considered a medium of exchange. We must ask ourselves why do the World's Central Banks continue to buy and hoard the yellow metal.
Remember when the dollar was "as good as gold" and the official price was $36.00 to the ounce? Gold backed currencies limit a Goverments ability to print paper money!! I remember when a ceratin French President started to repatriate paper dollars for the gold in Fort Knox only to have President Nixon close the gold window.
your right( mirloz,) but my problem has always been holding to long., I'm from Dudleyville AZ ,so I'am just a little flee, jumpimg from one stinky dog to the next, if I can pocket a few grand , from my experance it's time to go , and I am thinking( mgm )of (jrcc) they have been stomped for a while . Dudleyvile university say's watch all, like a crow , but what do I know.... go people go , do your homework on jimmy he can make you a buck but more than likley not,.,., Hausta.
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