I'm Not Selling

Good evening, just thought I should write since a couple of family members and few friends have asked me if I am selling my long held gold position. In short, obviously by the title of this post, the answer is no. I first shed light on this position in the post Random Rants:

I remember when I made my first purchase. It was 2004, I held an internship at J.P. Morgan Chase, the Credit Card Division, not the I-Bank. It was late in the afternoon and my mentor, Mr. Hancock, 15 year veteran instant messaged me saying, "Kudlow & Cramer just said they would short gold at 394." This of course was music to my ears only for the fact that my father spent 20 years as a jeweler in Iran. Much of the West doesn't understand the importance of Gold in Asia. The majority of the Middle East only trusts the yellow metal as a true store of value. In fact, to this day, anytime there is a wedding, there is a transaction of Gold between the two parties. Further, 80-90% of the gifts received are gold! With one of the more youthful demographics, Gold will continue to be in circulation.

Now to India, same story as above. There is just massive amounts of Gold that is treated as a currency. Men wear Gold as a symbol of wealth and it's not the 14 K material! I just find it hard to believe that anytime Gold is talked about in the media it is talk of inflation. And don't get me started on that, as inflation is the most wrongly used word today. Inflation is not rising prices, rising prices are the result of inflation. Inflation is just the increase in money supply/credit.

So within a week of Kudlow and Cramers great investment idea of shorting an asset class that I personally have "inside info" through my father, I made my first purchase of the yellow metal. Physical gold of course, at the price of $396 an ounce. I still hold it. In addition the next year I purchased premium gold coins, the Saint Gaudens, MS-63 and the MS-65. Consequently, late 2005 I purchased physical silver, at around $7.15 an ounce. I saw a cheap asset class and my reasoning is 100% fundamental and there will be a time to sell. Call it a liquidity crisis, solvency, whatever you want, but as Mr. Coxe says, "Gold is the only asset that is no one else's liability."

Buying gold at $396 an ounce and silver at $7.15 an ounce wasn't always the easiest or most popular statement back in 2004-2005. In fact, I remember a guest who came to our house for dinner one night, MBA background. He asked what I was buying and my response wasn't met extreme ridicule. Shortly after, I excused myself from the table because my mannerisms and attitude had become slightly immature relative to my age. I remember vividly that one night.

Nowadays, most people don't believe that I hold these precious metals. So either way I'm at a loss of words. And I'm not selling, I can wake up tomorrow and gold can be down 200 and silver down 4 and it wouldn't bother me. People don't understand these commodities nor their respective mining process. Quite frankly, I don't care.

Often times, I save an article here and there just for memory. Relating to gold, earlier this year I saved this one, dated January 3, 2008, titled: "India housewives rush to sell trinkets as gold soars." This was at $868 an ounce and while I'm not the genius who will sell the gold at the exact top, my sign to sell will be when India's housewives buy their gold trinkets back at much higher prices. What will gold do tomorrow? that is Utterly Unknowable.

Thank you,

S.K.