There’s lots of gold news out this morning, what with stories about the Saudis having quietly added 180 tonnes to their reserves and all manner of converts to the thinking that the metal is acting like a global currency again, by far the best global currency in a sea of bad ones given what governments have been doing with their paper money in recent years.
In the Globe and Mail this morning was this report on the subject (hat tip Dan) that comes with a somewhat different slant due largely to the fact that it originated in Canada.
A major global currency suddenly looks shaky; a handful of European countries cling to life preservers in a sea of debt; the global recovery shows signs of sputtering; tensions across the Middle East rise; and the leaders of the free and not-so-free world can’t seem to agree on anything, from major financial reform to the tricky task of unplugging cash lifelines from ailing economies.
This is the backdrop to the Great Gold Rush of 2010…
Gold did come down somewhat in mid-May, right on seasonal cue, before taking off to new heights. But before reaching for that sell button, it’s worth noting that the average decline is less than 1 per cent. Gold mining stocks, though, are another matter. “Gold equities are super-strong in September,” Dr. Murenbeeld, chief economist with Dundee Wealth Economics, said the other day from his office in Victoria. “So in July, you want to start buying. … You can get a seasonal [price] swing of 5 per cent. Now that is noticeable.”
Dr. Murenbeeld is not now and never has been a member of the fraternal order of gold bugs or conspiracy theorists who like to hijack debates about the precious metal. His is the rational eye of an economist who has assiduously tracked the metal’s ups and downs within the context of global financial and economic shifts for more than three decades. “I just happen to like analyzing it. It’s a simple sort of weather vane on what goes on in the world. It’s kind of like a currency. It’s a window into a whole bunch of things about a country and even the global economy.”
Clearly, economists in Canada are different than those in the U.S., beginning with the fact that they think the price of gold is relevant to anything happening in this century.
