Gold or Poetry
March 20, 2008
I can choose gold as my topic this morning or I can mention the phone call I received yesterday from a fellow who wondered if I published poetry.
I responded to the inquiry that occasionally I will run something in the letters section if it relates to coins, but I certainly wasn't interested in buying anything.
His reply was it was a love poem that mentions Queen Victoria.
Are you ready for gold? Yeah, me too.
It would seem that investors have once again had an attack of round-number-itis.
The $1,000 level for gold was such a shock, pleasant reality, target point or whatever that the price plunged, down now by more than $80.
I expect there will be a great deal of dissection of this event, but it will be helpful to remember that the big innovation for gold buyers in this cycle was the creation of exchange traded funds, or ETF's, which allow persons unfamiliar with commodity markets or coin dealers to get in on the action.
ETF's are convenient, but when Wall Street gets involved with gold or coins, we in numismatics get involved in Wall Street's problems.
Individuals and firms who have taken a bath with their investments in the banking industry and bank-generated mortgage securities might have been eying their gold holdings as salable to raise funds to shore up their overall financial positions, or to meet margin calls.
This kind of activity has nothing to do with underlying fundamentals - at least initially.
We will learn if this is a temporary hiccup or the start of a new trend lower, but only over time. The present fall is not anything like as severe as the decline of the first two days from the 1980 peak, so this could very easily be nothing more than a routine price fluctuation.
There. Gold or poetry? Perhaps we will find someone who says gold is poetry.
Something to add? Notice an error? Comment on this blog.
About the Author