December 5, 2010

AT LEAST DIVERSIFY INTO TULIPS:

What's behind the 2010 gold rush? (Richard Blackden, 04 Dec 2010, The Telegraph)

"The discovery of gold was little short of a revolution and came as California became American," explains Malcolm Rohrbough, author of Days of Gold: The Californian Gold Rush and the American Nation. "People were celebrating."

The yellow metal had of course dazzled many civilizations before, and from the middle of the 19th century added America to that list.

It has bewitched the country ever since and never more so than in the three years since the financial crisis erupted.

And as gold closes in on a 10th straight year of gains, a debate is raging across the country on whether the longest rally since at least 1920 can last.

The price has moved at a pace that would have left even the most ardent of the early diggers breathless. It is up 27pc this year and hit a record high of $1,424 an ounce early in November. Its current US renaissance isn't one that can just be measured on charts, either.

Officials have added a sixth weekly tour of the New York Federal Reserve's cavernous gold vaults, which sit in the heart of Wall Street and are home to about a quarter of the world's gold. This year's tours have been sold out for weeks.

A few blocks further south, near the very tip of Manhattan, business has been brisk at Manfra, Tordella & Brookes (MTB), one of the eight companies in the US authorised to sell the gold and silver coins produced by the US Mint.

"It's always been a profitable business but the last couple of years have been very profitable," Mike Kramer, MTB's president, explains after a day's selling. "People do of course take profits at these levels, but are you going to put that in the bank? People are reinvesting in gold."

Back in California, the Gold Prospectors Association of America, which organises gold hunts across the country, has seen its membership double to 70,000 in the past three years.

For Americans, though, the metal's latest dizzying arc upwards carries a sting in its tail.

Its allure seems to deepen with each new warning that, like an increasingly infirm and frail pensioner, the country's greatest days are behind it.

The prophecies come in all flavours, including those that recommend hunkering down with some bullion, water and provisions to prepare for the impending storm. It's true that gold stirs up fervour like little else, no matter where you live.

"Nothing arouses such passion," says Marcus Grubb, managing director of investment and research at the World Gold Council (WGC), the market's trade body. "Nobody gets this passionate about Japanese government bonds or Brazilian equities."

Few voice a vision of America's troubled future more forcefully or more controversially than Glenn Beck, a one-time radio disc jockey and now Tea Party champion and influential presenter on the Fox News Channel. His prescription for the country? It's a simple one: "God, gold and guns."

"If you've been watching for any length of time and still haven't looked into buying gold, what's wrong with you?" he asks on his website. Beck's also a spokesman for Goldline, a California-based company that sells bullion and coins, a role that's drawn the ire of his political opponents.

Posted by Orrin Judd at December 5, 2010 8:10 AM
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