Earlier today, I had the pleasure of discussing gold, equity valuations, bond bubbles, and inflation with Greg Hunter at USA Watchdog.
In the interview, I mentioned the nearly “everything bubble” and stated a belief that gold was one thing that was not in a bubble.
Following the interview, Hunter asked me to put my thoughts on gold and the “nearly” everything bubble in writing. Specifically, Hunter asked: “How Much Gold Should the Common Man Own?”
My answer follows. First, please consider my USA Watchdog interview: The Everything Bubble – Mike “Mish” Shedlock
How Much Gold?
There is no one correct percentage, but this rule applies: If you have trouble sleeping at night or are constantly worried about the price, then you likely have too much. If you are worried about a price drop of a few hundred dollars, or the equivalent percent in stock or bonds, you probably should not be investing in anything.
It’s curious that people are worried about gold but not the obvious bubbles that surround them. Media contributes to the ignorance by demonizing gold while praising bubbles.
It should be clear to any rational thinker that the Fed (central banks in general) blew amazing asset bubbles in equities and junk bonds in their response to the “Great Recession”. In their misguided quest to produce inflation, which they do not even know how to measure, central banks even re-blew the housing bubble.
In general, 10% to 25% in physical gold and silver seems like a reasonable amount. At major lows, miners offer tremendous opportunities. They were practically giving away miners in late 2015 and early 2016.
Outside of precious metals and miners, good investment opportunities are scarce. High cash allocations are likely to be wise. To be fair, I have been saying this for several years. This only proves that bubbles can always get bigger, until they don’t.
By Mike Shedlock