A gold bull's broken
confidence? Not just yet...
MY PERSONAL GOLD valuation has lost about 14%
since 2nd April.
Gold is by far my largest
investment holding, so I am taking a hit.
Markets overshoot, and
they correct...both ways. I don't forget that the dizzy top of 6th September
2011 was followed by a $400 per ounce reverse in 3 weeks.
Neither do I forget that
currencies with large debt overhangs, run by governments which have extreme
fiscal problems, will tumble into unpredictable and spectacular failure
sooner or later.
That's neither a unique
nor brilliant insight and very large numbers of people agree with me. We
shouldn't be too surprised when a few of them sell during counter-trend
phases of a complicated journey.
Here's a thought which
reminds me to keep my cool.
The significant majority
of the tiny number who eventually succeed in holding onto their wealth
through a failure of their currency will be those who acted as the storm
gathered, and bought gold. By the end they will have been through the mill,
having endured countless hours of anguished doubt. But when the market tests
them, with temporary movements against them, they will be resolute, provided
of course they have the fundamental confidence in their own judgement of the process of their national economic unravelling. This is what it takes to be a successful
investor through the failure of a money system.
I believe I am still on
the right side of the long term decline of Sterling, even if I also believe
that market commentators will, for a while, be right as gold bears. In time I
expect the upturn to be as sharp as this setback. Were
I to sell before that upturn I doubt I could trust myself to switch fast
depreciating Sterling back into gold at suddenly higher prices. It would be
just too painful.
Markets don't offer
smooth passage. They pitch up after each trough and slump over every crest.
It gets rough from time to time, so you batten down the hatches, point her
steadfastly to the wind, and trust she'll take the beating. She will, if you
hold your course.
A version of this
article first appeared this morning in City AM, the City of London's best-read
daily paper.
