James Turk: Forget promises, buy physical assets


Transcription of Finance News Network Interview with GoldMoney Founder and Director, James Turk
Lelde Smits: Hello I’m Lelde Smits for Australia’s Finance News Network and joining me from the UK is James Turk, Founder and Director of online gold trading company GoldMoney. James, welcome to the Gold Investment Symposium here in Sydney.
James Turk: Thank you, it’s great to be here.
Lelde Smits: It’s no secret you’re a gold bug, yet the price of gold dropped about 30 per cent last year and has just dipped under $US1,200 per ounce this month, so why the selling?
James Turk: We do get fluctuations in the gold price, we do that in all markets. But, as long as central banks continue to print, and that’s what they’re doing with quantitative easing and other programs, the gold price will continue to rise.
Lelde Smits: Why do you perceive gold as a necessary holding?
James Turk: Gold has been around for 5,000 years. It’s money that doesn’t have any counterparty risk, in other words, there is no one promising the value of gold except the market itself. The market accepts gold for what it is. And, it is an important diversifier in everyone’s portfolio. So, I think everyone should own some physical metal.
Lelde Smits: Where do you believe the price of gold should be trading?
James Turk: I think gold is cheap. Even though  $US1,200 per ounce sounds as though it’s expensive on a historical basis based on all of my measures, it’s still cheap. It’s still early in this bull market and I think gold is going to be going much higher. My near term target is $US2,000 per ounce and I think we will see that in the not too distant future.
Lelde Smits:  Could you put a time on that, when you say the not too distant future?
James Turk: It’s hard to predict these things, you know we can’t predict the future. All we should do is look where something, look what is of value, and accumulate what’s of value and know that valued assets are going to appreciate in price eventually. 
Lelde Smits: And James you have just presented at the Gold Investment Symposium, but following such steep price falls in what state do you currently view the mining industry?
James Turk: Well, it’s been tough. It’s been tough for the last couple of years. And usually when you’re in a situation like this, that is a pretty good indication that we’re at a bottom or very close to it. So, I’m pretty optimistic about going forward for the mining shares themselves.
Lelde Smits: What are your thoughts on mining shares?
James Turk: I’m really a gold bullion guy. I don’t really get involved in mining share per se, but I do believe that the mining share are undervalued and as gold goes higher from here, which is what my expectation is, I think the mining shares will go higher as well. But remember, mining shares are an investment and you have risks and things that you don’t have with gold bullion, they are different things when you are looking at one or the other.
Lelde Smits: Your presentation also referenced your latest book, “The Money Bubble: What To Do Before It Pops”.  What is the money bubble and what makes it unique?
James Turk: People think that what we are using today as currency is money, but it’s really just a money substitute circulating in place of money. Money is a tangible asset. Money is gold and money is silver. That’s the way it’s been for 5,000 years. The bubble has risen because we think that this paper really is a settlement, something that can be used in transactions. But, it’s just a convenience, it really isn’t money in a historical sense.
Lelde Smits: When do you expect it will pop and what will be the repercussions for investors?
James Turk: It’s hard to predict exactly when this is going happen. I actually thought 2008, when we saw the collapse of Lehman Brothers and all the problems there that the money bubble was going to pop, but here we are six years later. But, we’re basically in a financial system that is unsustainable. There is too much debt and not enough wealth being created to carry and service that debt. So, my guess is that, in the next year or two we are going to face some very difficult financial situations, not unlike 2008, perhaps even worse.
Lelde Smits: James, how would you advise investors mitigate this risk?
James Turk: During periods of financial uncertainty you want to own tangible assets of all sorts. You don’t want to own promises. You don’t want to own financial assets. And, by tangible assets I mean not only physical gold or physical silver but things like farmland, buildings, timberland, things that have productive assets. And, regardless what happens to the monetary system, these tangible assets will continue to produce wealth and I think that’s the key.
Lelde Smits: Finally James, what would you say to investors who say gold has no use or utility and only perceived and imagined value?
James Turk: An ounce of gold today buys the same amount of crude oil it did 60 years ago – that’s one of the keys to having a successful sound money. And, for the foreseeable future gold is going to continue to preserve purchasing power. There will be fluctuations from time to time in gold’s price, but gold will preserve purchasing power over long periods of time and that’s why I highly recommend it.
Lelde Smits: James Turk, thank you for joining me on the Finance News Network at the Gold Investment Symposium.
James Turk: Thank you very much.