McGuire, Hard Money

As the number of books on investing in gold continues to proliferate, Shayne McGuire’s Hard Money: Taking Gold to a Higher Investment Level (Wiley, 2010) stands out in several ways. Most importantly, the author methodically builds a case for gold by analyzing five drivers of potential price appreciation. They are: the increasing likelihood of fiscal crises in major economies of the world, the return of inflation, a small allocation shift into gold by institutional funds, the rise of China, and gold’s potential return to being the dominant financial asset in the global monetary system.

In the second part of the book McGuire describes in some detail the kinds of elements that might be included in a precious metals portfolio as a subset of an overall portfolio—stocks, ETFs, physical metals. He explains how to buy coins, including rare coins. All in all, a good practical guide for the investor.

Here are a couple of points that struck me as worth sharing.

McGuire argues that gold can be viewed as the “youngest major investment asset class” because “it is only since the early 1970s that it started being broadly perceived as an investment.” Before the collapse of the Bretton Woods monetary system in 1971, gold was money; currencies were “receipts that represented and were exchangeable for hard money.” Therefore it makes no sense to evaluate gold as an investment prior to the 1970s. As McGuire writes, (more…)

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