Market watch: Gold bugs’ unmerry Christmas
Santa brought the gold bugs quite a present last week. It was very big and extremely nasty...
From the previous Friday’s close to the low on Thursday, the CME February gold contract...plunged $82.10 or 5.1%...
The article, apart from comments about "radical gold bugs" is even in tone, but the commenterwebs are clogged with the usual gang of gold detractors yelling "I told you so!" at "gold bugs."
Look, I don't hoard gold, for a variety of reasons. And for some of the same reasons I'm not convinced that buying gold now is a good idea if you're looking to make money. But every single time the price backs off, anti-gold analysts and dilettantes come out of the woodwork to crow about how the bubble has burst, proving the gold bugs wrong, just like they predicted. And it's a kind of stupid that's hard to fathom.
First, it's totally out of proportion to the actual price situation. Anti-gold commentators have been insisting that precious metals are at the peak of a bubble ever since it started climbing at the start of the 21st century, since when the prices have climbed from $256 an ounce to a high of just under nineteen hundred dollars, with detractors yelling their tol'jya-sos at every pullback along the way. This "plunge" to the high fifteen hundreds may reasonably frighten recent investors who bought in the seventeen hundreds, but it still represents huge gains to the long term gold bugs at whom the taunting is usually aimed.
Second, these commentators fundamentally misunderstand the people they're taunting. An investor hoping to make money on gold is dismayed by a price drop. A hardcore gold bug is hedging against future economic catastrophe, in which gold will definitely be worth more than it is today. Even if that's three more depression-and-recovery cycles away, the gold bug will still win, because you never take a loss until you sell. Taunting a gold bug about a price decrease shows that you know nothing about the person you're mocking: to them, a price decrease isn't a disastrous loss of investment value; it's an opportunity to buy at a lower price.
This isn't a lump of coal in the gold bug's stocking. It's a post-Christmas clearance sale.