GOLD GLOWS

Divergence has been a popular theme in the markets of late. Even before the big January surprises, investors were thinking divergence, in one particular case the U.S. dollar and the U.S. economy were expected to diverge from much of the rest of the globe.

Well, there's another divergence afoot, not one many anticipated as pointed out in an article from The Daily Bell. Simply put, as confidence in central banks grow dimmer, gold and it's attractiveness as a safe haven glow more and more.

Why Buying Gold Won't Save You from the Zombie Apocalypse ... Despite any advice you might have heard to the contrary, gold bullion is far from a good investment, even if the world is coming to an end. The idea of having a hedge against the end of the world and the collapse of our financial institutions might be alluring. But actually, buying and storing significant amounts of gold bullion won't do you any good in that unlikely event, despite any advice you might have heard to the contrary. – Fool.com

Of course the above excerpt is brought to us by the Motley Fool, one of the bigger mainstream investment web destinations. The description is entirely predictable and could have found a home at Bloomberg, CNN or even CNBC. Gold is always to be portrayed as a Keynesian "barbaric relic."

In fact, we learn later in the description that there are specific assets you should own "in the event of an apocalypse." Gold is not one of them.

The featured expert, John Maxfield, has a thing or two to say about gold.

"Here's how I think about gold, and this is how I would recommend that investors think about gold, or anyone who's thinking about buying gold for any type of investing purposes. As a general rule, investing in gold is a bad idea, and here's why.

"When you invest, your biggest ally is compound returns, because that grows the size of your returns without you doing anything on an annual basis, and pretty soon, your small returns of 1% or 2% a year turn into 50%, 60% a year on your original basis. But in order to tap into compound returns, you've got to be invested into an income-earning asset. And the problem with gold is it doesn't own any assets."

Maxfield does grant that gold is a "hedge against anarchy" but says if society is really collapsing, you probably want to stock up on medicine and antibiotics rather than gold.

Ironically, another anti-gold epicenter – Reuters – provides us with a rebuttal to the Fool. In a post just today entitled, "Central banks and Chinese buyers helping to spur gold demand," Reuters is uncharacteristically upbeat about the yellow metal's prospects going forward.

Buying by central banks as well as Chinese investors seeking protection from a weakening currency helped lift demand for gold in the final quarter of last year and the trend looks set to continue, the World Gold Council said ...

China remained the world's biggest consumer of gold last year, ahead of India, with economic headwinds influencing purchasing, the WGC said in its annual "Gold Demand Trends" report. The WGC's members include the world's leading gold mining companies. Chinese demand for gold coins surged 25 percent in the fourth quarter from a year earlier as consumers sought to protect their wealth after Beijing devalued the yuan currency.

It's not just physical gold. Miners are up and silver is up, too. Oddly enough, it is central banks that have been leading the charge toward gold.

Reuters: "Central banks have been buying gold to diversify their reserves away from the U.S. dollar and their purchases edged up to 588.4 tonnes last year, second only to a record high 625.5 tonnes in 2013."

We don't know how you feel about gold. We do know how you should feel about central banks.Trust in gold. The excuses about gold not being an investment and so forth have been going on forever. We've seen, heard and read them all. 

The excuses for the existence of and continuation of central banking with its phony fiat money, however, are far more deceptive and dangerous to your financial health.