Lear Capital Commercial Pushes Mysterious Asset, but is it the One Asset to Rule Them All?
Posted: April 28th, 2012 | Author: Joe | Filed under: Economy, Investing | Tags: Gold, Gold Coins, Lear Capital, U.S. Deficit | 3 Comments »There’s a new Lear Capital commercial I’ve been hearing a lot on the radio lately. I find it compelling because Lear Capital makes great use of the element of mystery in this commercial to sell a specific asset. The mystery of course is: what asset? For all the talk of this asset in the Lear Capital commercial – they never say what the asset is!
Here is an example of how they discuss this asset in the Lear Capital commercial:
This asset is up over 100% since 2008 and Morgan Stanly predicts it could rise another 30% for 2012!
Is your curiosity whetted?
If not, the ad department at Lear Capital does their best to do so.
This one asset is not a stock, and not a bond… Call Lear Capital to learn more about this one asset that has returned 18% per year for 11 years… Call Lear Capital to get a special report and video on this “special investment”
This “special asset” is of course gold. Lear Capital is a gold dealer and they’ve been aggressively pushing the precious metal for some time now. I have to say that they do a good job of piquing interest where other gold dealers usually resort to all out fear to sell gold. This Lear Capital commercial doesn’t avoid the fear angle altogether though. They have plenty of elements targeting uncertainty (and rightly so).
Tired of losing money in the bank? …Artificially low interest rates and high uncertainty have helped this one asset out perform all other investments. You can continue to live with market volatility or invest in a secure asset that’s kept its value.
This Lear Capital commercial certainly does their best to make gold seem like the “One asset to rule them all.” Over the past 10 years, it has been, but there’s still that line about gold being a “secure asset that’s kept its value” that implies it won’t lose value.
If there’s a bubble in gold, then a lot of people are going to lose a lot of money. The question of course is whether gold is a bubble.
To answer that, you have to consider what has been driving the rise in gold prices, and whether those factors will continue.
What is driving the price of gold?
Gold is typically used as an inflation hedge, and there has certainly been a lot of concern over inflation in the past few years, but prior to the numerous rounds of government “stimulus” and quantitative easing, fear of inflation was not the reason for gold’s rise. Uncertainty was. The War on Terror and general threat of terrorism created great uncertainty in the early half of the 2000′s.
Since the financial crisis though, the fear and uncertainty have revolved around the so called debt bomb of massive public debt and devaluation of the dollar due to the many “stimulus” programs.
What does the future hold for gold – has anything changed?
As an investor in gold, I think you need to ask yourself whether these factors are likely to persist, increase or abate. Is the U.S. government likely to significantly reduce its spending and reign in the deficit? The increase in national debt of 50% in the last 4 years suggests this is not likely.
Another factor at play here is the U. S. dollar as the reserve currency. While this is true, the U. S. government will be able to “monetize” its debt – that is decrease the value of the dollar through inflation and pay the debt down with less valuable dollars.
But what if the dollar is no longer the currency of the world?
Interest rates on the debt would spike and the U. S. government would no longer be able to print its way out of its debt obligation. Think Greece, Spain, Portugal, Italy and all the other bankrupt nations in Europe.
Don’t think it can happen? Check out Is the yuan the new dollar? from MSN Money. China would love to supplant the U. S. currency with its own. If that happens, the price of gold would probably rise greatly.
Is buying gold the right move? I don’t know. I’m no expert, but there certainly seems to be enough reason to at least hold some gold.
Given the reasons outlined above, conventional wisdom would suggest that gold is a necessity to preserve your wealth. Then again, conventional wisdom is often wrong in the end.
What others are saying