Monday, June 21, 2010

USA Today Guide To Gold

The article's fairly descriptive, adding a gold skeptic near the end for balance. Essentially, it say gold is a fear trade. It makes a good point about the current outreach of gold beyond the usual haunts: other people are seeing the fragility of the financial system as extending to fiat currency itself.
Debt isn't the only thing that has people worried: The staggering losses of the past decade are hard to fathom, as well. More than a trillion dollars vanished in the dot-com boom of the early 2000s; trillions more went up in smoke in the credit crisis.

Because of the meltdowns — and the speculation that led up to them — people don't associate stocks with companies and products and streams of income any more, says Markman. "These days, stocks are just numbers on a piece of paper or a PDF from your broker," Markman says. "And when you think about folks like (Bernie) Madoff, where numbers were just numbers, you realize it's not so clear what the source of monetary value is."

Realizing that your currency is simply worth whatever people think it's worth can be a difficult experience. "When things go sour, even if you thought you knew how things worked, suddenly, you don't know. In the financial markets, you have that in spades," Markman says. "No one likes instability. People will latch onto anything that gives a foundation to their lives and reduces their anxiety."
Lack of confidence in paper assets: that's the current ticket.

I have only one thing to say: if USA Today is treating the new wave of gold buying as newsworthy, then gold really is coming in to its own.

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