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Video: Talking about the dangerous lure of gold and new trading rules, and taking your questions

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Watch video of me talking about the dangerous lure of gold, the road ahead for financial regulatory reform and new stock trading rules designed to prevent another flash crash -- even though we don't know for sure what caused the one two weeks ago. And I take your questions.

Roll your mouse over the video field to see the start arrow.

By Frank Ahrens  |  May 19, 2010; 11:36 AM ET
Categories:  Video  
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Next: Another bad day for stocks. Thanks, Europe.


Frank, it never ceases to amaze me when folks like you get all concerned and start to hyperventilate about people buying gold, but in the next breath will wax eloquent about buying a mere piece of paper called a 'stock'...

A stock has no intrinsic value - ask me what my 800 shares of ENRON are currently worth? The answer is of course, zero... I lost every penny I spent on that stock...

Or ask me what my shares of old GM are worth (purchased during 16 years with the corporation through stock sharing - I would have been better off spending it on drunken weekends in Atlantic City)...
Or my shares in RIG (Transoceanic who recently went down on more ways than one)... And on, and on...

When you buy stocks you are going to Las Vegas, you are gambling... You are betting that enough of your stocks will appreciate in price to offset the losers and give you a profit... Often this happens but sometimes it does not - I have made more in stocks than I have lost over the years, thankfully!

Now the gold coins I have purchased over the years, not a lot of coins but more than you can hold in one hand... Yes they have gone up some and they have gone down some... They never have gone down to zero like my example stocks above and they have never hit a home run like a few stocks I have bought (a very few, unfortunately)... Never the less over the 40 years I have bought gold (sporadically) it has slowly and steadily appreciated, with a couple of upward spurts, and now is a comfort to know that it is in in hand and that no amount of financial or political turmoil can make it worthless - and in fact is more likely than not to be VERY valuable in difficult times to come...

So, in opposition to your comments I strongly urge folks to buy gold consistently, a bit at a time (the old averaging scheme) and to have at least 10%, and preferably more, of their net worth in the yellow metal before they retire...



Posted by: ad4hk2004 | May 20, 2010 8:29 AM | Report abuse


Yes, there are, of course, risks from stocks and a single stock CAN lose 100 percent of its value. This is why one diversifies one's portfolio. A well-diversified portfolio will not lose 100 percent of its value.

The warning about gold is very justified. The price, right now, is extraordinarily high. If its price drops in half, it could easily take 20 years to recover. That can be a huge loss for people whose investing time horizons are less than 20 years. Warnings like these are important for the non-professional investor. Wouldn't it have been nice to have similar warnings before the stock market or housing bubbles?

And by the way, I'm not hyperventilating.


Posted by: m5691 | May 20, 2010 8:58 AM | Report abuse

The U.S. dollar is going to be worthless about one year from now. About the only use a lot of bankers and Wall Street brokers and executives will have for good, however, is as tomb ornaments, like some Egyptian mummy. As for the rest of us, I have no idea of what gold is going to be worth in the early stages of World War III, but it wont be much. Oh, take the time right now, to write a letter of thanks to President Obama, the Democratic and Republican leaders of Congress for their policies that will ultimately end up costing you and your family their ives.

Posted by: mibrooks27 | May 20, 2010 11:43 AM | Report abuse

At any given time the value of Gold is assessed internationally and it is physical. The value of any currency depends upon the inflation of the country which could be 5% or even 250%. Also that depends upon the politicians who could be corrupt or would like to be in power at any given cost. Thus the value of US Dollar could be anything next year and with all indications currently prevailing in the US where the debt is increasing in trillions ,it could be 75% or even less next year. Thus Gold is always a safer and practical investment. But even a fool can say that it will never be zero while the stock could be and has been zero. Investing a part in Gold is always safer.
Prof Ganeshan

Posted by: ganeshan | May 20, 2010 12:47 PM | Report abuse

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