'Financial Times losing it's glitter not gold':
Minews Story
Date : April 16, 2004
Financial Times Is The One Losing Its Glitter, Not Gold.
Quite amusing, really, to see the diatribe against gold by one of the feature writers of the Financial Times. Presumably he is too young, or inexperienced in investment, to know that wise investors have 5 to 10 per cent of a balanced portfolio in gold or shares in gold producers to hedge against the vagaries of paper currencies. Nor , presumably, has he read the annual gold survey by Gold Field Mineral Services, the leading precious metals consultancy, which was published just when his little fingers were rattling over the key board.
This report, according to Kevin Morrison, a rather more balanced journalist on the Pinker than Pink ‘un, predicted that gold would rise further this year to around US$450 following the 17.3 per cent rise last year. GFMS also pointed out that “there is also a sizeable amount of gold that is being held in London’s bullion vaults by bullion banks on behalf of investors, some institutional and some private.”
Our friend the feature writer seems to think that the fact that Rothschild has quit the gold market is a signal that the game is over. What he has yet to assimilate is that banks make decisions that are not necessarily logical to mere spectators and they often get it wrong. In October 2001 Minews predicted that the decision by Credit Suisse First Boston to pull out of the gold business was the strongest confirmation received to date that gold was on the brink of a new era. And so it proved, but that is probably too long ago for the FT leader writer to remember, or else he was still at university.
Just as a reminder, CSFB had been one of the most active operators in the gold market as a market maker and as a trader in gold derivatives all through the bear years, so presumably this move signalled a recognition that conditions might now be about to change. Not so, was the CSFB answer. Gold will be in a bear market as long as central bankers remain holders. It will take them another ten years to get rid of all their gold and during that time bullion will remain on a bear tack.. How wrong can a merchant bank be?
The last words can be left to Christopher Fildes, one of London’s most experienced writers on the banking sector which he was following when the FT leader writer was but a twinkle in his father’s eyes. The following article appeared in his City and Suburban. The Spectator on August 23rd 2003. Minews was given permission at the time to reproduce it.
AS GOOD AS GOLD
“Gold and governments are in competition, which is why they will always make it hard to buy it.
Its value does not depend on ministers’ promises or central bankers’ signatures. Gordon Brown did his best to bomb it, selling off half the nation’s reserves on bargain basement terms.
Not long ago you could have been arrested for buying gold, and even now you would set off the alarm which, in theory, is set to catch money –laundrymen.
No wonder that the banks cannot be bothered to stock it. They will happily arrange to sell you almost any other store of value, but try asking them for an ingot and see what you get.
With a bit of luck they will soon offer you the next best thing: shares in gold bullion. The World Gold Council is launching a fund, backed by gold tucked away in HSBC’s vaults.
If you would prefer to tuck it away in your own vaults , you might want to know that in Wembley and Southall gold bangles are sold by weight and because they sometimes help to pay the fare to India, they are known as tickets.
Indians like to have their gold, or some of it, where they can see it. Promises to pay are not in the same class.”
Says it all, doesn’t it?
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