Gold is going mainstream

If you said back in 2001 that a major insurance company would buy hundreds of millions of dollars worth of gold bullion to "hedge against asset declines", you would have been laughed at. The idea was inconceivable.
Yet today, there was this news article.

(Bloomberg) -- Northwestern Mutual Life Insurance Co., the third-largest U.S. life insurer by 2008 sales, has bought gold for the first time the company’s 152-year history to hedge against further asset declines.

“Gold just seems to make sense; it’s a store of value,” Chief Executive Officer Edward Zore said in an interview following his comments at a conference hosted by Standard & Poor’s in Brooklyn. “In the Depression, gold did very, very well.”

Northwestern Mutual has accumulated about $400 million in gold, and Zore said the price could double or even rise fivefold if the economy continues to weaken. Gold gained 10 percent last month, the most since November. The commodity has more than tripled since 2000, rising for eight straight years.

“The downside risk is limited, but the upside is large,” Zore said. “We have stocks in our portfolio that lost 95 percent.” Gold “is not going down to $90.”

Has the world turned upside down? Isn't conservative insurance companies buying gold a sure sign of the apocalypse?
Maybe not. Major hedge funds have been buying gold in huge quantities lately.

On May 15th, a 13F Filing showed that hedge funds managed by John Paulson held almost 9% of all outstanding GLD (the gold bullion ETF) at the end of March, a position with a market value of around $3 billion. Paulson's funds also owned about 15% of GDX (the gold mining stock ETF), 11% of Anglogold (AU), 4% of Kinross (KGC), and 3% of Goldfields (GFI).

Around the same time we learn that David Einhorn of Greenlight Capital, another well-known hedge fund manager, has accumulated a substantial exposure to gold-related investments.

Gold isn't just for gold bugs anymore.

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gold bugs are going to be all over this news

I actually figured this would happen myself, but my timing was off. Gold bugs, beware of your timing.

Secular Bull

James Turk said, regarding secular bull markets. (I'm paraphrasing)

"The bull will try to throw you off, to shake you out of your position, thats what bulls do. All you need to do is hang on"

Robert, the trend is your friend, the bull will bail you out. Gold is not for speculation ... it's a wealth preservation mechanism.

ok, since we're doing the Gold thing

Physical gold or ETFs like GLD or mining stocks?

There were reports that various options, indirect gold ETFs etc. would implode but physical gold will become scarce and increase dramatically.

I'd go after physical gold

WAY too easy to counterfeit ETFs just like any other stock.

Maximum jobs, not maximum profits.

Maximum jobs, not maximum profits.

Article forthcoming

regarding the subject of tight supplies.

I would not presume to offer investment advice as there are so many variables. But in the Macro sense the idea of holding physical is gaining mainstream attention and acceptance.

A new trend?

From what I understand, John Paulson has offered his clients the opportunity to have their portfolio's priced in gold instead of fiat. Many jumped.