Are Gold Buyers Crazy?

Last week, Peter Hug said that about 25% of all physical gold buyers are “crazies.” The comment is remarkable, because Hug is an executive at Kitco, one of the largest precious metals dealers in North America. In fact, Hug is the Director of Kitco’s Precious Metals Division.

Hug’s reasoning is that a lot of the people who buy physical gold believe that the United States financial system is headed for a dire crisis. Many are worried about a complete collapse of the US dollar. The rationale for this belief is pretty simple and comes back to basic economics. No government in the history of the world has ever acquired the levels of sovereign debt that America has – while simultaneously printing unearthly amounts of money – and avoided a major financial calamity.

Apparently, Hug believes America is going to be the exception to the rule and that students of history are completely irrational. The real topper to this terrible public relations move is that Kitco doesn’t exactly have a sterling track record. As Craig Hemke puts it:

[This is] the same Canadian metals firm that employed the permabear Jon Nadler all through the previous bull market for gold. The same Canadian metals firm that made headlines after being alleged as a tax fraud in 2011 and 2013. The same Canadian metals firm that gleefully reported Jeffrey Christian’s smears of Andrew Maguire and GATA.”

SchiffGold’s Chairman Peter Schiff provided a more balanced viewpoint to CNN:

The fears of an economic collapse in the United States are not irrational. I think it’s more irrational when people are complacent that nothing can go wrong… [Owning nothing but physical gold] is being too fearful and maybe obsessed with it. But is that any less rational than the person who owns no gold whatsoever?”

Peter and SchiffGold both believe that investors should save for their long-term future. Physical precious metals are a vital building block of a rational savings plan. We have never recommended that investors pour their life savings into gold and only gold. Cautious acquisitions of physical gold and silver should make up 5-15% of your total portfolio. Investors should try to hold those metals for the long term and not expect to make a quick buck in a couple years.

Do you really want to shop with someone who thinks you may be crazy?

If you’re a Kitco customer, give SchiffGold a call instead. You’ll find a friendly Precious Metals Specialist ready to talk with you about the markets and what role a little gold and silver can play in your portfolio. We do business by the phone, because we want to develop lasting relationships with our clients, whom we treat as human beings.

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