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Gold: You know you're in trouble when even the NY Times gets it
Think of it as the Tea Party of investments.
The price of gold has been rising as anxious investors cast what amounts to a throw-the-bums-out vote against, well, just about everything.
The weak dollar, the volatile stock market, the lackluster economy, the yawning budget deficit, the accommodative Federal Reserve — all this and more have people rushing for gold.
The metal touched a high of $1,424 an ounce on Tuesday, although the price remains well below the peak of the early 1980s once inflation is taken into account.
“It’s in effect a protest vote that there’s something amiss with current policies,” said Abhay Deshpande, a portfolio manager with First Eagle Funds and a longtime gold investor.
“People are almost acting as their own central banks because the advantage of gold is that it acts as a hiding place in times of currency turmoil,” Mr. Deshpande said. A steady drumbeat of higher price targets from Wall Street firms — as well as recent pronouncements from political leaders — has buttressed what was already strong investor demand.
Read the rest
here.
2 comments:
So they got a long-time gold-investor to go on record talking up gold. I am not sure what exactly this is supposed to prove. I dare say that you could find a few oil tycoons who would be willing to tell you that it is good to buy oil, as well as a few GM investors who would be willing to talk up Chevrolets.
All those positions are consistent. There is a finite amount of gold, oil and Chevrolets which can only be generated with capital saved from prior production. (Well, also with QE that steals from future savings but that's another rant). By contrast, digitized money will be generated ad ininitum so all other things being equal, commodities will appreciate in terms of dollars. Now that the worlds' central banks have decided to play the monetary version of "chicken," gold, oil, et al. seem a better bet than US Treasuries. I see no reason to trust the worlds' central banks to preserve the purchasing power of their currencies but I'm open to being proved wrong.
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