The following tables illustrate one of the dilemmas of mainstream money management: The vast majority of financial advisers and portfolio managers are big fans of bank stocks because finance is, in their minds, a crucial if not the crucial form of wealth-creating activity in the modern world. So the big names in the field — Goldman Sachs, Deutsche Bank, JP Morgan, etc. — are generally seen as safe places to put client capital.
Gold and silver, in contrast, are fringe, primitive, atavistic concepts that are, at best, “insurance” against some kind of 100-year flood that can’t be predicted and probably won’t happen. But some clients still like such things, so what the heck, we’ll allocate 1% of the idiots’ money to it to shut them up. (1% is literally the proportion of global capital invested in precious metals.)
Unfortunately, that’s credit bubble thinking. Banks are dominant forces in an economy only when that economy is creating an unhealthy amount of credit. When the process exhausts itself, the banks tank, and terrified capital flows back into “primitive” safe havens. Like here:
John Rubino runs the popular financial website DollarCollapse.com. He is co-author, with GoldMoney’s James Turk, of The Money Bubble (DollarCollapse Press, 2014) and The Collapse of the Dollar and How to Profit From It (Doubleday, 2007), and author of Clean Money: Picking Winners in the Green-Tech Boom (Wiley, 2008), How to Profit from the Coming Real Estate Bust (Rodale, 2003) and Main Street, Not Wall Street(Morrow, 1998). After earning a Finance MBA from New York University, he spent the 1980s on Wall Street, as a Eurodollar trader, equity analyst and junk bond analyst. During the 1990s he was a featured columnist with TheStreet.com and a frequent contributor to Individual Investor, Online Investor, and Consumers Digest, among many other publications. He currently writes for CFA Magazine.
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