“Gold’s a Currency…Damn the Critics”

Jim Cramer, never one to shy away from an opinion, defended his bullish call on gold this morning amid calls that the yellow metal has reached a top.

He began by noting that “Gold went down yesterday. Almost immediately what happened? People called the top in gold. Everywhere. The web. The papers. The TV. You name it. Me? I said use the weakness to buy.”

“The ‘top-callers’ today will not be scorned despite the resumption of the gold rally,” Cramer continued.  ”But me? Yesterday I was heckled immediately on Twitter about recommending gold into the weakness. People I speak to wanted to know how I could be so bullish on something that has run up so much. You think any of those people have come back now and apologized or questioned their own judgment?”

The remainder of his piece is below:

Nope. That never happens with gold. Never.

This is all rather amazing to me. I have caught almost a double in gold and I feel like very few people went along with me. The people who call the top in this metal? I wonder how many of them are actually in gold. How many actually have ever owned gold. How many of them even seem to be aware of how gold trades or where it fits in the asset spectrum.

What were the critics saying that got to me? One Twitter follower immediately seized on the notion that we were at a top “because the dollar-gold trade is over.”

My eyes glazed over this one entirely. Gold’s been up for eleven straight years. The dollar’s fluctuated and been all over the place. But one thing is certain: the correlation holds no water.

Another very smart person questioned whether I was jumping on to a crowded bandwagon, and that the sentiment toward gold has never been more positive. I don’t care about sentiment. I care about percentage of portfolios in gold. Even after this run the numbers I see indicate that gold makes up no more than about a percent and a half of portfolios. That’s way too low. Call me when it gets back to 5%, the historic percentage that gold has in the average portfolio.

Two others accused me of “top-ticking” gold, meaning “now he comes in and recommends it?” What can I even say about that criticism? I am simply saying if you don’t own any, here’s another chance to dip your toe in it. I don’t like to buy rallies, I like to buy weakness. But when you recommend something and then it goes down people freak out EVEN AS YOU TOLD PEOPLE TO BUY ON WEAKNESS.

Gold’s a currency. Gold’s about avoiding the weakness in the dollar and the euro. Gold’s about an alternative to owning something that governments can debase.

Until governments can either create gold, like alchemy, or they raise rates to the point that there is a terrific return on bonds vs. inflation, I am sticking with my position.

Damn the critics. Full speed ahead.