Two Articles Debating Buying Gold

The first article's been posted by the Wall Street Journal Online, and it's by Shefali Anand. The piece's title gives away the author's opinion on the matter: "Beware the Siren Call of Gold."Anand recommends only putting a small amount of one's wealth into gold, with a if-you-must tone, and also recommends doing so with a gold ETF.

The other article, posted in CBS MoneyWatch, is more balanced. The author, James Picerno, notes that the main reason for buying gold is to hedge against inflation - and there's almost none to be found nowadays. After noting this fact, he lists five reasons why gold should go up: the falling greenback, central bank purchases, an outpouring of greenbacks in the global economy, probable return of inflation, and increased individual and institutional demand. In addition to suggesting gold ETFs as a purchase vehicle, he also suggests that gold-buyers buy buying government-issued bullion coins.


Articles like the former one tend to show up after an investment drops. That's part of the news cycle, as more people are likely to read a piece panning an investment that's already gone down. Also, an author who's bearish can adopt a more confident tone if his/her conclusion's backed up by a recent plummet. Bearish authors writing in the headwinds of an advance tend to be more hesitant and conciliatory.

The first one could be seen as a short-term contrary indicator, but only to the extent that the news cycle itself can serve as one. If a contrary indicator, it's a weak one because the business press isn't flooded with similar saturnineness.