The report that Hong Kong requested the return of its 2 tonnes of gold to be stored in its new vaults and its
suggestion that other Asian countries do the same and store their gold with
them resulted in a wave of uninformed hype.
Statements like “the move deals a significant
blow to London's historical role as a global hub” (from the aptly named
Fool.com) and this weird non-article from a Marvin Clark that is all questions and no
answers or opinions are typical of the new breed of gold commentary.
With reported central bank holdings of 30,000t, how
can anyone think 2t is “significant”, even if the whole lot had
been short sold by whoever they had it “stored” with? As one wit commented, “I
moved my BBQ from my mom's house to my house last week. According to the
vague premise of this mysterious 'logic', my BBQ must be going up in price
soon!” They are in the running for my quote of the year.
I would also note the similarities between the Hong
Kong announcement and this report on
Dubai: talk of Dubai a
“natural choice” for central banks in the region, Dubai to be
home to gold backing an ETF. Well, they can't all be. These attempts at
cracking London's fix (pun intended) on gold trading and settlement occurs
with some regularity and is met with a yawn from experienced gold players.
Every now and then a country tries to become a “bullion centre”: Shanghai, Thailand, India. They never get off the ground
because the rest of the world doesn’t trust them, or trusts them less
Unfortunately, I have noticed an increase in gold
commentary from people who have no experience in the gold markets, and it
shows. I suppose if no one wants to read your opinion on a leverage stock
play, what else are you going to do but write about what is hot, even if you
know sweet stuff all about it.
Editor to Journalist: “hey, gold seems to have
passed some magic number, go write something on it for tomorrow's
paper.” Journalist searches for last newspaper article on gold, does a google search and picks up some third hand commentary
which misinterpreted “Gold ETFs allowed for EFP transactions”
into “Gold ETFs allowed to settle COMEX futures”, and mashes it all
together with some clichés and there you have an article for
consumption by the general public who believe that the financial journalist
knows what they are talking about.
I am thinking of starting an index of commentaries
on gold and more specifically, the number by those who have never commented
on gold before. I think it would make a very good bubble top indicator to be
used along with the “receiving stock tips from a shoe-shine boy”
(today to be substituted with taxi drivers I suppose). The number of Kitco forum posts might also be good, particularly the
occurrence of the text “to da moon”.
Bron Suchecki has worked in the precious metals
markets since 1994, when he joined the Perth Mint as an Administration
Officer in their Sydney retail outlet. In 1998 he moved to Perth to work in
the then fledgling Depository division. He has held a number of roles since
then in the treasury, risk and governance areas of the Mint.
All posts are Bron's personal opinion and not
endorsed by the Perth Mint in any way.