Gold's role in asset allocation -
Trying to figure out where gold 'should' be trading is tough since central banks have routinely suppressed the price to make their own unbacked fiat currencies look better/less bad. And China has possibly been suppressing the gold price in order to continue accumulating on the cheap.
As Jim Rickards points out, gold itself isn't really good for very much except as money, or as a backing for money. Countries like China and Russia have been aggressively building up their gold reserves over the past decade for a reason. When the coming financial reset comes (SDR), having large gold reserves will give a country a strong place at the global 'dinner table'.
There's a good chance the SDR will need to be partially backed by gold, at least in the beginning. Rickards does the math, and to provide a 40% backing would put the gold price at approx $10,000/ounce. During the transition to the SDR, US paper assets like stocks/bonds will be hit big time. Rickards says the US standard of living could drop 60% overnight as the dollar loses its role as the world's reserve currency to the SDR. The dollar will become just another 'local' currency for use within the US.
Rickards recommends investors have 10% in physical gold as disaster insurance. You hope the gold doesn't do well since that means your paper investments are still doing OK. In a $1 mil portfolio with $100 K in gold (70 ounces), $200 K in cash, $350 K in stocks, $350 K in bonds, if the stocks and bonds dropped 50% and gold went to $10,000/oz, your portfolio would be worth $1.25 mil instead of the $600 K it would be worth without the gold.
So think of gold as portfolio insurance, a diversification tool. You don't want a huge position in gold, but 10% could save the day when the dollar system unravels, as it eventually will. The global finance 'oligarchy' have been preparing the way for the SDR for a long time. They know the US dollar won't be suitable as the world's reserve forever, and the SDR has many advantages.
