The silence in the major financial media on gold and precious metals last month
was deafening. As recently as a few weeks ago, you couldn't get away from gold
headlines if you wanted to. For months leading up to gold's parabolic jump,
the financial press was inundated with articles about gold. Most were wildly
bullish, but there also were quite a few bearish articles to be found and I
wrote a few of those bearish ones . The yellow metal certainly gave us all
plenty to write about. In a short-lived bout of speculative hysteria, the price
of gold soared above $1,900 in early September before quickly falling back down
to earth, losing $300 in a matter of weeks. But throughout the month of October,
very little was published on gold, bullish or bearish. It's as if the
investing public suddenly lost interest in the yellow metal. Some of the waning
interest is understandable. Gold's reputation as a "safe haven" certainly
lost its shine with Octobers action. Safe havens do not exhibit that kind of
volatility. And when it really does appear that the world is ending, it is to
the safety and liquidity of U.S. Treasuries that they run not that most
barbarous of relics, gold. Yet a funny thing has happened. Quietly, under the
radar, gold has mounted a comeback, rising more than $100 per ounce in just the
past week. As a professed gold bear, this makes me pause. Gold is rising quietly
, in the absence of the usual blustery gold bug bravado. This suggests the
weaker buyers were shaken out by last month's volatility and the current rise
might be a little more durable. It appears gold's role has shifted from that
of "crisis hedge" to "risk asset." After Europe's announcement that it
finally is serious about sovereign debt seriously jolted investors' animal
spirits, all risky assets have gotten a boost. This includes global equities,
industrial commodities and, yes, gold. I've made known my skepticism of
gold's value as a long-term investment in past articles. It pays no interest
or dividends, it has little in the way of intrinsic or industrial value, and the
only way you profit from gold is by finding someone willing to pay more for it
than you did. That's not an investment; it's a high-risk speculation.
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