I bought gold bullion back in 1998 as Y2K approached. That financial assessment was based on the fear of a financial hiatus brought on by digital money being wiped out or severely hampered. Thankfully, that threat came and passed but the gold, durable as ever, remained.
When the coins arrived, and I handled one of those golden discs, I understood immediately why kings have slaughtered and maimed for gold. I understood why nations for millennia have based their financial identity upon it. I understood why Moses declared that the gold of the land of Havilah was good. The coin I stroked not only reflected back to me a face, but also durability, stability and simplicity. Prime qualities in a rare but exchangeable material.
Therefore, it has outlived all its suitors. Nebuchadnezzar and Nero have gone, but the gold they assiduously pursued and possessed now resides in some bullion coin or bar, an item of jewellery, a museum piece or inside some machinery somewhere awaiting its next metamorphosis. Men may allow kings to be buried and decay, but they cannot allow that yellow metal to also lie in the dust while it transfixes their gaze.
Gold was $290 an ounce when I invested in it back then. It is currently priced at $310 and apparently on a long-term ascent at last. Back in that month of 1998, the Dow Jones was just above 8000 points. It is still just above 8000 points at the time of writing. Amazingly, gold has outperformed stocks over those four years and shows no sign of letting up. Who would have predicted that in 1998?
Now as I watch the bear market currently mauling paper investments left, right and centre; the appeal of renewing that golden acquaintance has been reinvigorated. Greenspan has now whipped the foot pump behind his back and is feigning innocence by whistling skywards. The savvy investors have seen his folly and are now running to that metal which not only does not depend on a credit bubble but thrives when it bursts like a hyperventilating school kid with bubblegum.
The alchemists sought the secret, which turned base metals such as lead into gold. The monetarists of government today think that have turned lead into gold via electronic printing presses. Like the alchemists of old, they hoped to flood the markets and get the spending benefit first. But their lead is still lead and my gold is still gold. Their paper "lead" mountain grows to the moon but the amount of gold has been set since the days of Creation.
So, worried about the Dow Jones crashing? Buy some bullion. Concerned about paper money becoming just paper? Grab some gold. Frantic about terrorists striking again? Invest in ingots. The bear market in gold is just about over; the sleeper has awoken and will again advance over the inflationary landscape. Hold onto your mettle and metal and watch capital preservation and appreciation in action!
September 9, 2002
