This was the third story on gold that the Financial Times had yesterday. As we said in "The Financial Times Sings Praise of Gold. They're wrong.", we disagree with the macro thesis.
Over the years I've wondered about the role of financial journalism in promoting various investment themes. I've known writers who thought nothing of front-running a story. I've known others who wrote puff-pieces to maintain access (or in one case, a pathetic attempt to seduce a corporate officer). I've heard investment types who were convinced that the media were willing participants in a product-pushing Wall Street cabal.
For the most part financial journalists are reasonably intelligent, underpaid folks, susceptible to the herd mentality that all of us are. Being a bit more gregarious than average, they tend to talk about what people are talking about, which in the investment world is often (though not always) tardy. The pros resist this temptation and tend to be a bit more lone-wolfish.
This long intro was precipitated by a conversation last weekend about the lack of coverage of gold when it bottomed at $252 in 2001, ending a twenty-one year bear market. So I took note yesterday when one of the best organizations in the business has three stories in one day. From the Financial Times:
Investors in gold are demanding “unprecedented” amounts of bullion bars and coins and moving them into their own vaults as fears about the health of the global financial system deepen.
Industry executives and bankers at the London Bullion Market Association annual meeting said the extent of the move into physical gold was unseen and driven by the very rich.
“There is an enormous pick-up in investment demand. I have never seen a market like this in my 33-year career,” said Jeremy Charles, chairman of the LBMA. “The gold refineries cannot produce enough bars.”
The move comes as fears grow among investors over the losses at investment vehicles previously considered almost risk-free, such as money funds....MORE