Confidence in stocks plummets as gold bullion soars. Part 1.
December 13, 2010 – Look for a banner year for gold bullion investment in 2011, as insider trading investigations begin to prosecute and investor confidence in Wall Street plummets. Insiders’ abuses are certainly no secret as they defiantly flaunt their successes, but rarely have they been called on the carpet in a highly respected financial forum.
However, that is precisely what Paul B. Farrell has done in a scathing attack on the stock market published in the Wall Street Journal’s MarketWatch. Calling stocks “Wall Street’s ultimate sucker bet,” Farrell warns “Do not buy stocks. Not for retirement. Not in the coming decade.”
According to Farrell, “Adjusted for inflation, Wall Street has lost 20% of your money in the past decade . . . [and] will lose another 20% of your retirement money” by 2020. But there is far more to the warning than predicted poor returns. As the old saw goes, “follow the money.”
One early statement released by "Operation Broken Trust," an investigation into investment fraud, gets to the root of the matter: “Investors, as opposed to traders, buy stocks in companies whose profits they expect to rise. The conventional wisdom says stock prices will follow profits up, but over the last two business cycles, that simply has not happened.” With profits soaring at 29 times the rate of stock values over the past dozen years, a lot of money in which investors should rightfully share has been siphoned off via hedge funds and countless machinations designed solely to further fill the coffers of already obscenely wealthy insiders.
Few are so naïve as to expect permanent change from these investigations. Most likely the offenders will walk and insiders will continue to squeeze every last dime out of investors with newer and even more insidious derivatives. It is reassuring to know that they can’t get their greedy paws on our privately held gold bullion investments.
