Jim's mad mouth said it, so it must be true: the economy's shrinking like a popped balloon, the fed doesn't care and the president is looking the other way. This morning Jim Cramer said it quite succinctly, "We're in a recession!" Just in case you needed any more emphasis, he added an exclamation point!
Well, according to the wisdom of Jim, who has studied previous bear markets like there's no tomorrow (which there might not be in the case of several overexposed regional banks), only two sectors are going to be perky this year: ag and gold.
And gold is certainly sparkling on the exchanges: today gold was trading on the New York Mercantile Exchange at $907.40 per ounce; yesterday it hit a record high of $914.10. By the time you read this, gold might be running in the Michigan primary on a platform of "shininess for all."
Cloned sheep-cow hybrids and soybean seeds with two heads aside, it's quite a quaint idea that gold is special, now ain't it? It sort of reminds me of our pioneer days. The US stock market is going to hell in a hand basket, but guess what? There's a pretty, shiny element that we'll pay handsomely for. It might make our eyes sparkle and our pockets jingle, but what is gold exactly?
Perhaps gold is the secret ingredient in Coke? Does it make dandruff shampoo? Does it serve juicy hamburgers and crispy fries? Can gold make our computers work faster? At that price, gold must surely make our vehicles purr along at 65 miles to the gallon, no?
No. Gold is still a mineral that comes from the earth. Unlike Alan Greenspan's reputation, it won't tarnish over time and it won't crumble. It's malleable, but dense (with a specific gravity of 19.3). And 1oz of gold could be stretched out to more than 50 miles. Cool eh? Sure, it's cool, but it doesn't do a whole lot. Gold sounds like a luxury I can't afford. I prefer investments that do stuff, companies that make things, organizations that provide services. Stuff I understand.
So Jim, thanks for the wise words, but I think I'm going to pass on the gold tip and go back to the grasslands of Monsanto to sit this recession out.
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The next great British economist (I mean after Adam Smith, not that statist monster J.M. Keynes) has been sighted!
Madam Trixie, you're right. Gold ain't nothing but a dead fish. It's shiny but you cain't eat it!
Still, it's always been a hedge for the investor whose "sphincter factor" on stocks and bonds has gotten too high.
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