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For a good take on the
mainstream financial media’s thoughts about gold, have a look at this item by Matt Phillips at the WSJ MarketBeat blog
after Goldman Sachs said more Fed money printing is on tap and the metal
responded by surging to a new all-time high:
In light of such prognostications from such a closely watched
observer, it’s unsurprising to see gold and other precious metals
marking big gains. Gold’s up more than 2%, clearing the $1,270 mark, a
new record.
Shares of Gold-related stocks are sizzling too. One of the arguments
for gold of course is that Fed money printing is going to debase the dollar,
which will make hard assets such as the yellow metal even more sought after.
Here at MarketBeat we’ve been on the record
saying that gold is bubbly. We still think so. But if we
were actively betting that that bubble is going to pop, we’d be in a
world of pain. After taking a reprieve a few months ago gold has continued
its upward drive.
Put simply: We’ve been wrong so far. Gold is up 16% year to
date, much better than the roughly flat S&P performance. But we still
think its dangerous to listen to the head-out-to-the-bunker-in-the-salt-flats-with-a-shotgun-a-year’s-supply-of-spam-and-sackful-of-gold-ingots
crowd.
Gold is working, because it’s working,
and it’ll continue working until it doesn’t. Then look out.
Yeah, look out, the gold
bubble is going to burst – if not at $600, then $800 … if not at
$800, then $1,000 … if not at $1,000, then $1,270, if not at $1,270,
then …
Based on commentary like
this, it would seem that we’ve still got at least a few years to go
until gold prices get really crazy and writers like Phillips get
even more frustrated. There is still a clearly dismissive view of investing
in gold by many in the world today who just don’t seem willing or able
– even at this point in the ongoing financial crisis – to
consider the possibility that the current monetary system might just be
fatally flawed.
Tim Iacono
Iacono
Research.com
Tim
Iacono is the founder of Iacono Research which provides market commentary and
investment advisory services specializing in macroeconomic analysis and
commodity based investing. He also writes the popular blog The Mess
That Greenspan Made.
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