Are most investors not yet on board with gold after seven straight-up years?
*Barron's, by Alan Abelson, January 7, 2008
“TALK ABOUT GREAT ENTRANCES! For investors, anyway, they don’t make them any better than the memorable one staged by that precocious calendrical infant, 2008. That is, if you’re an investor who happens to have a portfolio chock full of gold and overflowing with oil.
The precious metal never glistened more brightly than it did last week as it soared past the all-time peak of $850 an ounce set nearly four decades ago. Not be outdone, crude made hydrocarbonic history of its own by topping $100 a barrel, an all-time record high and, keep in mind, please, we’re not talking any old all-time, we’re talking the real thing: geologic all-time.
Now, we’re not so cloistered or insensitive as to fail to recognize that an absolutely humongous number of investors to their sorrow — including not a few of those extraordinarily bright chaps and chicks who subscribe to this august magazine — own neither a speck of gold nor a thimble of oil.
In that melancholy event, obviously 2008 did not begin on an upbeat note. Quite the contrary. But, hey, don’t lose heart — the year still has 365 other days, at least two of which, even a timid soul like us would be brave enough to wager, will witness a rise in stock prices.
Actually, we can understand why folks, especially those of a chronically cheerful disposition, shy away from gold. It is, after all, the nearest thing we have to a Dow Jones Average of Global Misery. We are a nation of optimists, and a real optimist would just as soon drink a quart of sour milk as own something that keeps reminding him that everything isn’t hunky-dory. Then, too, for a lot of people, the mere mention of gold stirs up painful pre-fluoride childhood memories of having cavities filled by drill-happy dentists.
Gold’s perverse proclivity to feed on bad news was much in evidence as the gathering woes of the economy at large (think housing collapse and the gaping black hole in our accounts with the rest of the world) and the financial sector in particular (the mother of modern credit crunches) provided the spark for the precious metal’s combustible performance that sent it soaring to unprecedented heights.
And it’s not an accident that bullion has battened rich on the sickening downward spiral of the dollar, which, easy to forget, was until not all that long ago the most revered currency on the face of the planet. The remorseless shrinking of the greenback’s value has given rise to a clutch of scary scenarios, from an inflationary chain reaction to a kind of global Olympics in which nations fiercely compete in a race to devalue their own coin that is destined to end with every participant (except Zimbabwe) a loser.”
*This information is solely a highlight of the opinion of a third-party publication and is incomplete. Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.