Gold has been one of the most talked about assets in the past few years, as it has surged to heights that some never thought possible. But now that the precious metal has logged 13 consecutive years of positive returns, many are beginning to doubt its abilities to continue the historic run. We recently had the opportunity to speak with Nick Barisheff about why he feels gold is still poised to make a run higher. Mr. Barisheff is the President and CEO of Bullion Management Group Inc., a bullion investment company that provides investors with a secure, cost-effective and transparent way to purchase and store physical bullion [for more gold news and analysis subscribe to our free newsletter].
Commodity HQ (cHQ): How does the partial fiscal cliff solution from January impact gold?
Nick Barisheff (NB): The sound and fury on the fiscal cliff debate signified nothing, as does the subsequent sound and fury on the debt ceiling. The fact is that real economic growth comes from business-led capital expenditures versus tinkering with tax rates and budget cuts in the face of insurmountable debt. Gold should remain a core part of any twenty-first century portfolio that seeks to preserve wealth in the face of certain, and increasing, economic turmoil.
cHQ: Why do you feel that the United States has already fallen over the cliff?
NB: I’d defer to the learned opinion of three-time U.S. Presidential candidate Ron Paul. In one of his last interviews as a Congressman, Mr. Paul stated that, “The U.S. is already over the fiscal cliff with $222 trillion of unpayable entitlement obligations … The country’s bankrupt, they won’t admit it, and that’s why there’s so much anger and frustration, because it’s hard to divvy up loot when there’s none to divvy up.”
cHQ: Gold has had thirteen straight years of gains, does that bother you at all for 2013?
NB: All the conditions that have made physical gold a go-to, appreciating yet under-appreciated investment for this incredible bullion bull run remain in place for 2013 and beyond. The eurozone, United States and Japan are all actively engaging in various forms of proactive currency debasement, making real money more desirable [see also Merk Funds' 2013 Gold Outlook].
cHQ: The Fed has hinted at a possible end to quantitative easing programs this year, how do you think that will impact gold in the short and long term, if at all?
NB: Ron Paul’s assessment makes a “possible end” to quantitative easing an impossibility. He believes, as I do, that without political will to make immense, painful cuts to government spending that would rewrite previous social entitlement contracts, only a dollar crisis will force a change in the current monetary stance.
cHQ: Have you seen any recent trends or developments in the gold space that have caught your eye?
NB: Last week, the German Bundesbank reversed its position that storage of its physical gold in foreign hands is acceptable, and has demanded repatriation of some of its gold stored at the New York Fed and all of its Paris-domiciled gold. It joins many other central banks around the world that are bolstering vaulted possession of physical gold. Retail investors should heed this trend, and demand documentation that legally provides title to specific physical bars, and not accept IOUs, paper proxies or derivatives.
As a recent SEC Investor Bulletin on ETFs states: “Do not invest in something that you do not understand. If you cannot explain the investment opportunity in a few words and in an understandable way, you may need to reconsider the potential investment.”
Disclosure: No positions at time of writing.