Thursday, August 11, 2011

Aurophobia: The Fear of Gold

Part of Speech: noun
Definition: a fear of gold
Etymology: Latin aurum 'gold'

On New Zealand television this morning, a curious case of aurophobia broke out.

Instead of championing the merits of buying gold, the TV breakfast host derided those who have invested in it. His comments suggested that all the gold bugs and dooms-dayers will now be happy with the price of gold going up. Gives them something to crow about, he said. This host was even a former business editor on New Zealand TV. Could he not then have provided decent analysis of the reasons for gold's rise, rather than derogatory and reasonably inflammatory words?

What is it about gold that engenders such a polarized response among people? Just this week members of a family of a lady we know, who is interested in purchasing gold, intimated that she was foolish for doing so. No reasons, just 'poofed' the idea.

With gold (as this is being written) now up NZ$420 an ounce in ten days, surely a little intelligent questioning rather than throwaway lines are required?

It may just show though, how little gold is understood still. In fact, if the reaction of the masses, including the media, is still derogatory towards gold, then a NZ$420 rise in ten days will look like a picnic if sentiment ever turns to positive towards gold.

Gold is likely to settle back soon, probably around the low $1700. Perhaps. But with all the fear around and the world's reserve currency being debased, gold is now the reserve currency of choice for large institutions. It started with Central Banks being net buyers (and continues; note South Korea's purchase of 25 tonnes last week) and now appears to be flowing through to large holders of funds from Asia, the USA and Europe. By the time the local media and 'Mum and Dad' investors get wind of what is happening, aurophobia will be instantly cured.

The wonder drug of intelligent analysis will sweep through the population. But will they be too late? Probably.

Gold in New Zealand dollars: $2225.64 per oz
Previous all time high: $2243.75 per oz

Silver in New Zealand dollars: $48.56 per oz
Previous all time high: $59.19
per oz

Articles of interest:

Jim Sinclair interviewed by James Turk

See video here

The Anglo-Far East Company
The Original Private Gold and Silver Bullion Custodiann
Your reference: an-001

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