January 24, 2011 – You don’t have to look any further than the US Mint to see that Americans are buying gold and silver in record amounts. 2010-dated American Eagle One Ounce Uncirculated coins – both gold and silver – will not be produced due to a shortage of bullion blanks. According to one investor quoted by Jason Zweig in the Wall Street Journal that’s a pretty good sign that "the last two or three years have exposed that for the small investor, the game is totally rigged."
Professional traders have “loaded up on U.S. equities with cheap cash pumped into the economy by the Federal Reserve [and] would like nothing more than to dump their positions onto the ‘dumb money’ and call it a year,” Zweig says. The game is supposed to work like this: trader pros run up the market (nearly double this time around) and that lights John Q. Public’s fire. Individual investors (the dumb money) stampede the market and the pros cash in. Just maybe the smart money wasn’t so smart this time.
None-the-less, in the week of January 12 individual investors dumped a net $3.8 billion into mutual funds. Wall Street wants us to think that’s really impressive, a sure sign that happy times are here again. But is it? Well, no.
Typically more than 70% of a year’s new investments are made in January, and that $3.8 billion adds less than 0.1% to the total assets of the funds. In the past two years the figure for January was closer to $6.8 billion and over that same period a net $109 billion was pulled out of the funds.
John Q. got very badly soaked the last go round and Wall Street can’t seem to light his fire. The dumb money is getting smart, investing where the game isn’t rigged – in gold and silver bullion.
Senior Staff Writer – GoldSilver.org