The Wall Street Journal Doesn’t Understand Gold
- Three years ago is “early?”
- Three gold experts chime in
- When gold will dip in price
Gold’s Bull Run began in 1999. There’s no question about it. Just take a look at this 13 year chart of gold prices:
So...it’s confusing for the esteemed editors of The Wall Street Journal to say that buying the metal in 2007 meant that you were “early to the gold trade.”
But this past weekend’s story in The Journal titled “A Gold Bull and His Prediction: $10,000 an Ounce” makes just such a claim about Shayne McGuire, a pension manager with $330 million worth of gold held in the Teacher Retirement System of Texas.
The fact that The Wall Street Journal - arguably the most respected financial publication in existence - can make such a glaring misstatement about gold tells me that gold has far to go before a significant portion of the mainstream investing public even considers buying it.
Don’t get me wrong - I’m not saying that 2007 was an especially late period to enter the gold trade, but it’s kind of indicative of how the mainstream media, and even the mainstream financial media can be so off-the-mark with their understanding of gold.
For an interesting look at some relevant prognosticators who were earlier
to the gold trade than Mr. McGuire, I recommend taking a look at an
article published in the New York Times Magazine called
"Believing (and Believing and Believing) in Bullion."
This story quotes a number of gold bulls who I’m sure you’re familiar with: Doug Casey, Gary North and Jim Sinclair.
These guys easily beat Mr. McGuire to the party by 5-10 years.
You might be familiar with Mr. Sinclair’s notorious bet about the price of gold.
In April, 2008 he made a standing $1 million bet that gold’s price would be above $1,650 sometime before January 14, 2011.
With only 10 weeks and about $300 left for Mr. Sinclair’s bet to conclude, I’m guessing that he’s feeling a little under the gun.
After all, the last time gold shot up $300 in less than three months was at the final stage of the 1979-1980 bull run.
In other words, in order for Mr. Sinclair to win his bet, gold would have to experience the kind of run-up that capped off the end of the bull market in gold.
I don’t know if he believes that gold will tumble after it hits $1,650 an ounce, so if I had to make a prediction, I’d say that he’s going to lose the bet.
But that doesn’t mean I’m betting against gold.
As I discussed last week, I’m looking at any substantial dip in gold’s price as another buying opportunity.
And I believe we could see a huge opportunity to buy the dips in the next couple days. That’s because Federal Reserve Chairman Ben Bernanke will be unveiling the next round of money printing, aka quantitative easing, on November 3rd at the next Federal Open Market Committee meeting.
This FOMC meeting really has very little impact on my long-term view for precious metals. I just have a hunch that it could present a short-term buying opportunity. I hope you’ll be able to take advantage of the dips if they come this week.
To help you get prepared, I recommend looking over my three part guide on how to buy gold and silver.
Click the links below to access these articles for free:
How to buy gold and silver part I
How to buy gold and silver part II
Notes on how to buy gold and silver
Good investing,
Kevin McElroy
Editor
Resource Prospector
