A Study in Contrasts

Do you ever take a look at the Kitco commentaries and news stories? They include articles and news from a variety of sources and a variety of backgrounds.

This story from the Irish Independent, The curious rise of gold…, provides comments on gold investing in the Ireland markets. They provide quotes from two separate investment houses. Mr. Connelley from Citadel says, “For now, I would say tread cautiously, and if investing in it, do it in very small size.”

Likewise, Eamon Porter, principal at Aspire Wealth Management, believes gold will fall and claims the following, “Leaving aside consumer-led demand for jewellry and specialist electronic components, many investors look at gold as a hedge against the dollar. If the dollar strengthens, then the gold price will start to fall back.”

Interesting, the Chinese have a very different view from the Irish on investing in gold. In this story, Gold price to be hit by declining mine deposits, “The global supply of gold could become of increasing importance in light of recent suggestions that the Chinese are buying up the precious metal at record rates.”

They quote Xiam Zang, a bullion dealer in Beijing as saying, “Chinese people are buying more gold these days. In fact, many people are now convinced that gold is the best investment asset.”

As for the Americans, in his Nerves of Clay commentary, Lawrance Roulston states “History suggests that the gold market should correct after a spectacular rise such as we enjoyed over the past three months. However, the world is very different now than at any time in the past. Many investors are still nervous, or even full-on terrified. Gold provides comfort to those who have lost faith in currencies and other paper assets.”

Similarly, Eric and David Coffin comment in 2010 – The Tricky Bit, “The gold price will fluctuate against the Dollar, but it is increasing held as a hedge against all currency defamation. Even if we think some of the romanticism about gold is overdone, its supply can’t be conjured out of thin air like fiat currencies. This simple fact has attracted quite a few converts to holding some bullion as a portfolio anchor. We expect continued strength and perhaps new highs in 2010 because of this. Importantly, at current prices gold mining can finally function well.”

In his somewhat acerbic commentary on his Journey into Economics, Howard Katz talks of people who refuse to see economic events realistically. Though, he ends with, “Fortunately, we live in a world which is inherently based on justice. Those who see reality as it is are rewarded. Those who deliberately close their eyes to reality are punished.  So it was in the ‘70s.  So it will be today. History does repeat. It is repeating as we speak. Fantastic moves occur in the financial markets.  If you are on the right side of them, you prosper.  If wrong, you lose.”

In the global market, who is right? The cautious Irish, the impetuous Chinese or the analytical Americans?

Of all the quotes above, a favorite says, “However, the world is very different now than at any time in the past.”

Your best course of action regarding the economy and investing is to observe, research, learn, ask questions and don’t believe everything you see and hear without further investigation and consensus of several sources.