Virtually NO ONE Owns Gold! Price Will Continue to Move Higher
By: Frank Holmes Virtually no one owns gold, says Frank Holmes (www.usfunds.com). He predicts that prices will continue to move higher.
Private Ownership of Gold Remains Low
Eric Sprott (Sprott Asset Management and founder of the silver ETF: PSLV) recently explained how under-owned gold is as an asset class. Sprott wrote that despite a 30 percent increase in gold holdings during 2010, gold ownership as a percentage of global financial assets has only risen to 0.7 percent (gold ownership in 2011 is below 2010 levels). That’s a big increase from the 0.2 percent level in 2002, but Sprott points out that it’s misleading because the majority of that increase was fueled by gold appreciation, not increased level of investment.
Sprott estimates that the actual amount of new investment into gold [bullion] since 2000 is about $250 billion compared to roughly $98 trillion of new capital into other financial assets over the same time period.
Gold as a Percentage of Global Financial Assets is Low
The bar chart [below] from CPM Group shows gold as a percentage of global financial assets over time. In 1968, gold represented nearly 5 percent of financial assets. In 1980, the level had fallen below 3 percent. That figure had shrunk to less than 1 percent by 1990 and has remained there since. Sprott wrote that “it is surprising to note how trivial gold ownership is when compared to the size of global financial assets.”
Institutional Investments in Gold are Low
That point is magnified by the pie chart from Casey Research. Dr. Marc Faber included it in his newsletter to show just how small a portion gold and gold stocks are for large institutional investors like pension funds.
All Things Considered – John’s Commentary:
While it might appear that a large percentage of the population has a position in gold and silver, it is quite the opposite. My family, friends, and associates have witnessed me advocate gold (and silver) for 16 years, yet virtually none of them own physical metals.
Consider your circle of influence – how many of them actually own physical metals? While everyone seems to be clamoring for gold, it’s mostly talk and media hype.
Action to take: At every price point along the way, gold has seemed “too high”. It seems “too high” again now. It always will.
Continue to average in your purchases. We may have a price correction – maybe a significant one. But, what if we don’t? Concern yourself with one thing – do you believe prices will be higher a year from now? If you do, then don’t worry about what happens between now and then. Close your eyes and pull the trigger.
Quote of the day: “A prudent person forsees the danger ahead and takes precautions; the simpleton goes blindly on and suffers the consequences.” Proverbs 22:3
