We’re beginning to build a massive amount of respect for James Altucher due to his willingness to say things that will get him absolutely pilloried by the masses.
First of all, he’s a bull, which is never trendy, except during bubbles. Bears are always more respected intellectually.
Second of all, he goes out and promotes stuff like The Federal Reserve actively buying S&P Index Futures as a way to lift the economy. He describes it quantitative easing for Main Street. Whereas as the Fed buying fixed income, credit assets is a subsidy to Wall Street institutions, intervention in the stocks would get money into people’s pockets directly.
And now he’s taking on the gold bulls with a new WSJ piece arguing that gold — and yes, you’ve heard this before — is really just a worthless rock that doesn’t yield anything, has high carrying costs, doesn’t have much in the way of practical use, and doesn’t grow in value over time.
But, you say: sure, all that’s true, but gold has been a major winner, right?
Yes, but over the long term, Altucher says no:
Gold reached its peak in 1980 when it reached $800 an ounce, which is $2,000 in today’s dollars. So in real terms, gold has lost about 40% of its value since 1980. In the meantime, the stock market has gone up about 500% in real terms.
Some other time frames for comparison: From 1975 (post the U.S. getting off the gold standard) to now, gold is up 500%. The Dow is up 900%. Gold was worth about $20 an ounce in 1800. Since then it’s averaged a 2% gross return. Subtract out the costs of mining and storing gold, and what you have is basically a worthless rock that has a net negative return as an investment.
James, prepare to see the volume of hatemail in your inbox jump exponentially.