As we have written here before, gold today has a serious public relations problem. Of all the elements on the periodic table, gold - the shiny, lustrous, and uncorruptible yellow metal - carries more negative baggage than any of them, except maybe arsenic. Gold has always been a token and tool of human frailty and even depravity, From King Midas to ordinary misers, from the ancient cruelties of New World colonialism to today's financial dealings of terrorist groups such as Al Queda, and from the tomb-raiders quest to disinter it, to the U.S. Treasury's attempt to bury it forever.
Today some contend that gold's sometimes negative image doesn't stem from unsavory grave-robbers or suicidal international terrorists, but from that most vocal group of gold-owners known as the 'gold-bugs.'
In an article entitled "Hot, But Still Not Respectable - Gold's Image Problem" published last December, Steve Maich of Canada's Financial Post wrote:
"But others see it differently. They say that the biggest reason for gold's fall from favour is not central banks selling their reserves, nor is it big gold miners selling their production short on the derivatives market. Rather, it is the gold bugs themselves, who feed rumours of vast conspiracies, that are most responsible for the sorry state of the gold market."
Even Jean-Marie Eveillard, who manages the First Eagle SoGen Gold Fund, and therefore should be sympathetic to gold ownership, admits in Mr. Maich's article:
"The problem is that there are lots of bizarre people among the gold investors, which has made it difficult to make gold respectable."
Now, we have considerable experience with gold owners. And there's no arguing that there are some "bizarre people" among them. But for the most part we find gold owners to be pretty ordinary folks. A general description would be that they are distinguished chiefly by the fact that they have stewardship over a bit of wealth, and that they exercise an independent judgment about the world's financial picture and how that affects the preservation of that wealth.
It started as an innocent typing exercise, i.e., listing the various types of people that we know who own gold. We certainly don’t find them to be bizarre or conspiracists. So who are the people attracted to gold?
Without further ado, and in no particular order, we present:
Our Gang of Twenty-First Century Gold Owners:
The Fundamentalists. Gold is money, by God, and you're a fool not to have some, according to this group. A popular sentiment worldwide.
The Speculators. The charts tell them that stocks are done for and commodities are in a bullish uptrend. In this group we find many former buyers of mutual funds, along with refugees desperately fleeing the current low yields on bank Certificates of Deposit.
The Survivalists. Someday, and sooner than you might imagine, everything having to do with federal and state government, and, indeed, Western civilization as we know it, will come crashing down. You better have some barterable gold if you want to buy anything, because come that day, currency will be only be useful for toilet paper.
The Old Timers. Although we think here of gold buyers from the 1970s and 1980s, basically, anyone who bought gold before 1996 has earned, at no small cost, their gold star membership in this group. They may not be active buyers today, but this crowd roots for higher gold prices with a fervor unmatched.
The Cultist. Denizen of gold-bug chat rooms and worshipper at the altar, not of the golden calf, but of the gold bar. Saw the movies "Goldfinger" or "Three Kings" seven or more times. Likes the look of gold, and professes that everyone should have some. Of course, it suits him just fine that most people don't. After all, what are cults for, if not to separate those in-the-know from the out-of-it?
The Constitutionalists. There is only one money - well, two anyway - and they are gold and silver. This was decreed by the Founding Fathers in the US Constitution, a divinely inspired document written in Philadelphia in 1787. And by the way, did you know that our income tax is illegal?
The Preservationists. Their credo is that everything rots but gold. Worldly investments are tricky things that must be tended to constantly, while gold is a one-decision no-brainer. You buy it, hide it, and forget it, and whenever you or your heirs decide to dig it up, it will still be valuable as it has been for thousands of years.
The Traditionalists. If you have wealth, you probably have a stash of gold, some land holdings, and possibly many head of cattle. Isn't that what wealth is?
Criminals and Wannabes. These are folks who convert money to gold with an eye towards doing something anti-social in the future. Potential activities may range from making off with marital assets in a divorce, to beating the taxman out of his due. Many of them, much as criminals have since time immemorial, expend a great deal of effort at cross-purposes, and end up getting themselves and/or their families or heirs into complicated messes, often involving lawyers.
Rich People. They own gold - what can you say? Whether to the manor born, or those that have to stumble along and learn the ropes on their own, people of means invariably are attracted to the most concrete idea of wealth itself on this planet. After all, with all the financial shenanigans going on these days, without the measure of gold who is truly rich?
Hoarders and Misers. It's mine, all mine! I shall build a great shiny pile of the stuff! And no one will know, or ever have any of it, because it's mine, all mine! -True hoarders and misers aren't anti-social, they're simply a-social. They don't give a rat's behind for anyone else, and, not surprisingly, no one much cares for them, either.
The Experimenters. After you've been burned in every other investment field, eventually you get interested in 'real stuff' such as gold, real estate, natural resources, and the like. This species can be identified by their battle-cry, "They're not making any of it any more."
Historians. The party's going to be over someday for the paper/electronic dollar, just as every other fiat currency has ended in disaster over the past few hundred years. This group has a grudging respect for the enormous forces that have sustained the US dollar for the past few decades, but knows that it's just a matter of time...
And Finally, The Investors. By golly, stocks have been a disaster over the past three years or so, and current interest rates are a joke. You might as well buy gold, which seems to finally be getting off its duff after nearly two decades of infamously negative returns.
And there you have it.
After a while, we looked at our list of gold-owner types and realized two things. One, that most gold-fans fit into more than one category and, two, that the word 'bizarre' is a mite too limiting for this crowd.
Whichever groups you may fit into, and for whatever reasons you own gold, we hope you find yourself somewhere on this list. If somehow we missed you, feel free to add yourself as a unique category!