Which was not my surprise to see in front page of the financial supplement of the world this Monday , November 24, 2003, an article on the gold, the shameful subject. One does not speak about precious metals in the financial press, it is so, a sort of taboo of " writers of Newspapers ".
To speak about gold it is to appear as an investor of 19-th centuries, here we talk about telecom and internet. Not of this barbaric relic as the people use since millenniums for today exceeded motives. Now, one lives in the era of telecom and not on some flint.
The article begins with a report, gold went up, as title lets understand it " gold in the highest for seven years ", this noisy title which read to me this article with emotion, upset to read the first article bull on raw materials. In brief, the victory of the emotion on the experience lets with me think that I hold between my hands the first article bull on my favourite subject.
He admits that gold went up 60 % in 3 years, of 15 % in 1 year and he attributes this increase to Iraq, in doubts on the quality of the growth US and in weakness of the dollar.
Here, not question of structural reasons, deficit of the production, the market 20 year old bear because of manipulation of rates, closed mines, insufficient investigations, dangerous sales on credit, sector-based purchase of the Chinese market, the rotation, the silver, the platinum and the other central banks in the empty cellars because of loan... There, I already have my opinion on the author, he doesn't know subject nevertheless he speaks about it all the same & Well, I get lost, let us return to this article. It is enough to see the graph of the long-term gold to understand that the cyclical factors of type " geostrategic crisis " have consequences on the gold only in the short run. As far as the doubts of the resumption and the weakness of the dollar, there I applaud to two hands, because it is indeed the inconvenient functioning of the press US which hides behind this growth of paper and which builds the deficits US next to which Godzilla and King Kong are dwarfs.
The doubts of the growth in US are only very recent because growth itself, dates only some months while gold rises for three years. The author speaks in the bottom about the gold in August, 1999, it doesn't remind you anything? yes, yes of course, to look well , HAA here is that's right, it is exactly the highest of the market action which gold indicated by beginning its increase. Then to admit that gold can continue to rise understands that the rest can continue to fall, thing unwrittable in this type of newspaper, here is, which takes us to the second part.
To follow a plan in two parts (typical French high schools learning), he asks question: is it necessary to buy some gold? There, he answers in succession, without waiting more, NO, and he explains in his second part the reasons of this negative opinion.
Because gold is in a market 20 year old bear and lost ½ of its value, it is not necessary to buy it.
By demonstration, he disadvises us so to buy something which, as it indicates it, is not expensive.
Gold isn't interesting when there is deflation. It would be necessary to explain it to the Japanese who further to a deflation of 10 years lost confidence in their financial system and began buying some gold.
Then comes the time of certainties, " most of the observers exclude " a return of the inflation. Here, mylself will be reassure, because exactly very worried about money supply US, I believed artlessly that it risks to pull of the inflation, the check there I are ironic, I stop, it's a serious subject. This first-rate increase of the money supply US which pulls the devaluation of the dollar and a big competition to know that it will be the country in the badgest currency. The increase of the rates of Great Britain and the resistance of BCE doesn't have to see neither with the inflation?
Then it is the tour of the euro, he indicates that gold did not go up in Euros. It is in Europe a custom, when something does not go, it is fault in the euro or from Europe. He speaks even about inferior return, I shall like knowing how he qualifies the return on the DJIA if he considers that that of the gold in euro is inferior. It is true that gold has only little gone up in euros, but it is rather the good news for the European which can again buy some physical gold from a disposed price, what is not any more case for Americans.
Then, comes the argument of the levy of the gold which is for him a brake in the golden purchase, in do it t forgotten that in France surplus is taxed in 26 %?
After this explanation in two parts, whoever well balanced in lines, it more at all in comments, when one counts the number of arguments with charge and with discharge of the gold. The end of the article, journalistic style obliges, wants neutral. He admits that gold in the place in wallet but under shape of common capital of investment, what in France is a very bad choice because the managers of these capital very badly know subject and perform the wallet of actions of mining companies strongly (very very)" hedgé ". So, in case the author of the article is wrong on the tendency long term of the gold, you would lose all the same because placed on the badgest available support in this sector.
To conclude how every good editor that I am not, I have to admit that the sight of this title in front page of this big daily worried me. I said myself: " it is already the moment to sell? ". Because generally, it is the sign of the end of a bull market when this kind of daily becomes bull on your beloved sector. Ouf (Breathly) not, This article is in the right-hand side line perma-bull of the market actions of 2000's. Here we are, the contrary investor, that I am, reassured. But to be honest, this article is the most coherent on this subject which it was given to me to read in a financial daily. It is to say in which point gold did not love and it is so much the better because it is the best of the signals of purchase.
Dr Thomas Chaize