Gold reacted in the first few days
following the Japanese earthquake in a manner I think inconsistent with
it being viewed as a 'safe haven holding'. In last
Tuesday's e-mail in a commentary that suggested the gold price then
dropped because people were 'fleeing to safer U.S. Treasuries' I said
that "I for one can't see how U.S. Treasuries are a better (read
'safer') place to be than physical gold, unless one is fully invested in
the markets and isn't holding any cash - cash being a better 'medium of
exchange' than physical gold". Since then, I have been
reflecting on the large number of commentaries that are continuously
being made by 'gold experts' - both before and after the Japanese events
beginning last Friday.
One of the things that I have concluded is
that if you own physical gold and read what 'gold commentators' have to
say in the context of that physical gold ownership, it is extremely
important that you contemplate what underlying assumption(s) they are
making with respect to equity and money market stability when predicting
'gold will go to X$' or 'gold will fall to X$. On
Saturday an article titled 'Top Gold Experts: Buy and Hold the
Precious Metal' - reading time 6 minutes - reported on discussions
with what it refers to as "some of the smartest, most accomplished
investors in the gold industry". The six people who
express opinions in the article are (1) Rick Rule, a regular investment
conference speaker, (2) James Turk, GoldMoney.com, (3) John Hathaway,
portfolio manager Tocqueville Gold Fund, (4) Adrian
Ash, BullionVault.com, (5) Ian McAvity, Deliberations on World Markets
newsletter, and (6) Ross Norman, BullionDesk.com.
I suggest this article is a 'must read'
for anyone holding, or contemplating holding, physical gold or silver
(silver also is discussed). I think the commentators make
many excellent points that are well worth thinking about. It
will come as no surprise that all six currently are bullish on gold and
make price predictions - some with more reluctance than others in the
telling. Basically, I see the article as a partial primer
on where the gold price is, why it got to where it is, and where it is
likely going and why. Where shares in gold mining
companies might go price-wise also is discussed, and it is here that two
of the six experts focus to some degree on what is likely to happen if
we face broad market declines going forward.
I think you should read
the article and think hard about the views of these six experts in the
context of the assumptions they make, stated or unstated, about the
stability and state of the overall equity and money markets when making
their physical gold prognostications. I also suggest you
continue to look for and question those same underlying equity and money
market assumptions as you continue to read articles and commentaries on
physical gold, physical silver, and gold and silver exploration and
producer companies.