The Real Reason Billionaire Investors Buy Gold, and Why The Sky is ...

Americans are constantly bombarded with fear-mongers claiming that the "collapse is coming", the "end is near", that something bad (and very ambiguous) is on its way. We hear it from the right and the left, about everything from the economy to Swine Flu, from CNN, Fox News, MSNBC and every media outlet in between. Right in the middle of this spin cycle, is the topic of gold.

One of the things that we're told on a consistent basis is that we should put our money in gold. Gold is the only safe haven in the coming collapse; it's the only way to ensure our kids aren't fighting for scraps in the streets!

Another thing we're told is that when big investors start investing in gold, we're headed for certain disaster and imminent collapse. The most recent news, that British Billionaire Crispin Odey has invested heavily in gold, is posited as yet another sign of the end of days.

What's Really Happening?

In late 2015, there was speculation from HSBC (an investment bank) that gold would see a recovery in 2016 from prices that were at 5-year lows.

At the end of 2015, gold had fallen by about 45% (priced at $1060.84/ounce) from it's high in 2011 (when it was priced at $1910.78/ounce).

So, billionaires like George Soros (who liquidated a good portion of his gold holdings in 2011 and again in 2013) and Stanley Druckenmiller invested in gold, betting that the prices would rise. This bet paid off quickly, with gold prices rising 16% in the first quarter of 2016.

Meanwhile, as prices continued to rise, in May 2016, another prominent billionaire, John Paulson, disclosed that he sold off 17% of his gold holdings. Note that Paulson is one of the few investors that successfully predicted the housing crash in 2007.

Does this sound like an impending collapse, or just market speculation?

Going back to Crispin Odey, what you have is a British investor seeking to recoup losses from the Brexit crash, coping with the reduced buying power of the British Pound, and using a stable commodity which is showing bullish growth. This reduced the losses of an already poorly-performing fund with a loss of 24.8%, as of June 15 and as of the writing of this article has put the fund back on track.

Currently, the price of gold has seen wild fluctuations amid speculation on whether the Federal Reserve will raise interest rates.

What we have here is not a sign of the end times, but a price recovery of a commodity and both buying and selling as a result. This is no different from the buying and selling in 2013 or 2011.

So What's With the Gloom and Doom?

Fear-mongers are making a safe bet when they preach gloom and doom. So long as they manage to stay ambiguous. There will always be fluctuations in the market and there will always be a crisis somewhere. All they have to do is wait and say, "SEE! I told you that would happen." With the way news is presented (instantaneous and available 24/7), it is very easy to prey on people's fears that the world is going to hell in a handbasket. There will always be an audience (just ask Glenn Beck) of suckers who will gladly read and listen along.

Gold Isn't Even a Good Investment for the End of Days!

Let's say there is a devastating crash that leads to the end of days, an EMP goes off, or aliens invade. Gold will not help you. Not at all. It will become relatively worthless. If you are struggling to survive, would you rather have a can of beanie weanies or a sparkly gold necklace? That's what I thought. If you truly believe that the end is nigh and are playing that R.E.M. song on repeat (kudos if you know what I just referenced), stock up on things that will actually save your life; solar panels, livestock, a cabin with no cell reception, a fallout shelter. Gold will be useful during a reconstruction period when things are being put back together, but it will not keep you alive and safe if SHTF.

Even better are the companies that sell you gold and store it for you. What?!? So if the grid goes down and the market crashes, maybe the postal service will still be running and the company holding your gold will send it to you via priority mail? Good luck with that.

Conclusion

You are being ripped off. Your media heroes are living in Argentina "off-the-grid" because you paid for their latest ebook series, added to the hundreds of thousands of unique visits to their websites, and retweeted everything they've written or said for the last 5 years; not because they're convinced of an impending crash.

They're smarter than you, but not in the way you think. If a crash or crisis does happen, it will likely be manageable, and will not lead to total collapse. It certainly won't be due to a bunch of billionaires sitting around plotting a conspiracy around a couple of occult calendars. Either way, your fearless leaders will tell you that they told you all along it was going to happen.

As a side note, you will also see below, in my sources, that the media is not, in fact, ignoring the recent buying and selling of gold.

The links below are great resources to start from. Do your own research. Think for yourself. I may be wrong, but I've informed myself and have drawn conclusions from my own research, not some pundit. As always, I am happy to engage in constructive, substantive debate on the subject.

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EDIT: USD 10yr Chart

Hive account@aenor made a great observation. If you look at the USD over time, it is on an uptick. Here is a 10-year chart:

Source: tradingeconomics.com

Sources:

The Real Reason Billionaire Investors Buy Gold, and Why The Sky is NOT Falling - SPOILER ALERT: @dollarvigilante is wrong!

What's Really Happening?

So What's With the Gloom and Doom?

Gold Isn't Even a Good Investment for the End of Days!

Conclusion

EDIT: USD 10yr Chart

Sources:

Odey Fund Gold Purchase

Media Coverage of Gold Surge

Gold Response to Brexit

HSBC Speculation in 2015

Historic Gold Prices

Gold Drops Amid Fed Rate Speculation

John Paulson Reduces Gold Holdings

George Soros Sells Gold Holdings in 2013

Bankrate Pros and Cons of Investing in Gold

Gold Response to USD