The gold in the newspaper "Le Monde"
25.11.2003
Which was not my surprise to see in front page of the financial supplement
of the world this Monday , November 24, 2003, an article on the gold,
the shameful subject. One does not speak about precious metals in the
financial press, it is so, a sort of taboo of " writers of Newspapers ".
To speak about gold it is to appear as an investor of 19-th centuries, here
we talk about telecom and internet. Not of this barbaric relic as the people
use since millenniums for today exceeded motives. Now, one lives in the era
of telecom and not on some flint.
The article begins with a report, gold went up, as title lets understand
it " gold in the highest for seven years ", this noisy title which
read to me this article with emotion, upset to read the first article bull
on raw materials. In brief, the victory of the emotion on the experience
lets with me think that I hold between my hands the first article bull on
my favourite subject.
He admits that gold went up 60 % in 3 years, of 15 % in 1 year and he attributes
this increase to Iraq, in doubts on the quality of the growth US and in weakness
of the dollar.
Here, not question of structural reasons, deficit of the production, the
market 20 year old bear because of manipulation of rates, closed mines, insufficient
investigations, dangerous sales on credit, sector-based purchase of the Chinese
market, the rotation, the silver, the platinum and the other central banks
in the empty cellars because of loan... There, I already have my opinion
on the author, he doesn't know subject nevertheless he speaks about it all
the same … Well, I get lost, let us return to this article. It is enough
to see the graph of the long-term gold to understand that the cyclical factors
of type " geostrategic crisis " have consequences on the gold only
in the short run. As far as the doubts of the resumption and the weakness
of the dollar, there I applaud to two hands, because it is indeed the inconvenient
functioning of the press US which hides behind this growth of paper and which
builds the deficits US next to which Godzilla and King Kong are dwarfs.
The doubts of the growth in US are only very recent because growth itself,
dates only some months while gold rises for three years. The author speaks
in the bottom about the gold in August, 1999, it doesn't remind you anything?
yes, yes of course, to look well , HAA here is that's right, it is exactly
the highest of the market action which gold indicated by beginning its increase.
Then to admit that gold can continue to rise understands that the rest can
continue to fall, thing unwrittable in this type of newspaper, here is, which
takes us to the second part.
To follow a plan in two parts (typical French high schools learning), he
asks question: is it necessary to buy some gold? There, he answers in succession,
without waiting more, NO, and he explains in his second part the reasons
of this negative opinion.
Because gold is in a market 20 year old bear and lost ½ of its value,
it is not necessary to buy it.
By demonstration, he disadvises us so to buy something which, as it indicates
it, is not expensive.
Gold isn't interesting when there is deflation. It would be necessary to
explain it to the Japanese who further to a deflation of 10 years lost confidence
in their financial system and began buying some gold.
Then comes the time of certainties, " most of the observers exclude " a
return of the inflation. Here, mylself will be reassure, because exactly
very worried about money supply US, I believed artlessly that it risks to
pull of the inflation, the check there I are ironic, I stop, it's a serious
subject. This first-rate increase of the money supply US which pulls the
devaluation of the dollar and a big competition to know that it will be the
country in the badgest currency. The increase of the rates of Great Britain
and the resistance of BCE doesn't have to see neither with the inflation?
Then it is the tour of the euro, he indicates that gold did not go up in
Euros. It is in Europe a custom, when something does not go, it is fault
in the euro or from Europe. He speaks even about inferior return, I shall
like knowing how he qualifies the return on the DJIA if he considers that
that of the gold in euro is inferior. It is true that gold has only little
gone up in euros, but it is rather the good news for the European which can
again buy some physical gold from a disposed price, what is not any more
case for Americans.
Then, comes the argument of the levy of the gold which is for him a brake
in the golden purchase, in do it t forgotten that in France surplus is taxed
in 26 %?
After this explanation in two parts, whoever well balanced in lines, it more
at all in comments, when one counts the number of arguments with charge and
with discharge of the gold. The end of the article, journalistic style obliges,
wants neutral. He admits that gold in the place in wallet but under shape
of common capital of investment, what in France is a very bad choice because
the managers of these capital very badly know subject and perform the wallet
of actions of mining companies strongly (very very)" hedgé ".
So, in case the author of the article is wrong on the tendency long term
of the gold, you would lose all the same because placed on the badgest available
support in this sector.
To conclude how every good editor that I am not, I have to admit that the
sight of this title in front page of this big daily worried me. I said myself: " it
is already the moment to sell? ". Because generally, it is the sign
of the end of a bull market when this kind of daily becomes bull on your
beloved sector. Ouf (Breathly) not, This article is in the right-hand side
line perma-bull of the market actions of 2000's. Here we are, the contrary
investor, that I am, reassured. But to be honest, this article is the most
coherent on this subject which it was given to me to read in a financial
daily. It is to say in which point gold did not love and it is so much the
better because it is the best of the signals of purchase.
Dr Thomas Chaize
