AM 1150 Kelowna - Radio Ralies & Reversals

I'll admit I've never been a big fan of gold. I'm in the camp that gold doesn't have many uses apart from jewelry, and it doesn't pay a dividend. As a currency, I much prefer paper as opposed to carrying a bunch of gold bars in my jacket pocket, although, if we went completely electronic I guess it wouldn't matter except the gold would have to be stored somewhere, and at a cost most likely higher than paper. And the idea of moving back to a gold standard, well, that's a discussion for another time.

Leading economic indicators are starting to head south again. In the US, extended unemployment benefits have not been renewed and unemployment is still running high. With fiscal stimulus slowly being removed and Federal and State austerity programs around the corner, there's a very real risk of a double dip recession. I know the yield curve says otherwise, but you have to admit short-term yields are artificially low.

Recessions usually run the risk of deflation which no central bank wants to see. Printing money is the most likely response to inflate the problem away. In either case, gold should do well as a store of value. And to counter the argument that it doesn't pay a yield - Well, neither does cash right now. At least you can find the odd gold stocks that pays a dividend.

GB