Gold: Professor Wrong Says "Don't Buy" Again
Source: Adrian Ash, BullionVault (5/27/10)
Phew! That was a close call from our tenured contrarian indicator.
"Gold has become the favored hedge against financial and monetary uncertainty," said Niall Ferguson, Harvard's financial history professor, on Monday.
"It's certainly a time-tested way of coping with really turbulent markets."
Oh cripes! Niall Ferguson—our tenured contrarian indicator—now says gold is a proven defense against investment stress. It's taken 11 years and 356% gains in gold, but he's finally got it.
That's the top. Sell!
Oh, hold on—"A lot of the upside is already there," Ferguson went on, live by video link to the Wall Street Journal. "The time to buy was in 1999, not 2010. . ."
Phew! As you were, then, bloody-minded gold buyers. And as you relax, safe in the knowledge that Professor Wrong still says you shouldn't buy, let's remind ourselves just what it was he advised 11 years ago—back in 1999—the "time to buy gold" as he now puts it. . .
"The twilight of gold appear[s] to have arrived. True, total blackout is still some way off. . .Gold has a future, of course.
"But mainly as jewelry."
Fast forward to late 2008—some $445 higher per ounce for gold, slap-bang amid the post-Lehman's Crash crisis—and Professor Ferguson was at it again.
"I have been debating today whether gold bars really are the answer," Ferguson confessed to the New York magazine when quizzed about his portfolio for a puff piece that November.
But "they probably aren't," he decided. . .thereby leaving another $470 per ounce on the table over the last 18 months.
Now he says 2010 is not the time to buy gold either. So, given what happened when he rejected the idea in mid-1999 and then in late 2008, expect another $400-or-so on the price before the Laurence A. Tisch, professor of History next weighs in with his forecast.
The man whose last TV and book blockbuster, The Ascent of Money, concluded that "the state-owned bank [was] now close to extinction". . .just as the UK nationalized one-third of its finance sector, and the U.S. Fed bought $2 trillion of failing bank assets. . .now advises that "There are other ways to protect yourself, and maybe somewhat smarter ways."
Missing the point entirely once more, Ferguson recommends—instead of gold—buying Norwegian and Swiss government debt for protection from the sovereign debt crisis.
Clang! Clang! Everybody out!
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Formerly City Correspondent for The Daily Reckoning in London and head of editorial at the UK's leading financial advisory for private investors, Adrian Ash is the editor of Gold News and head of research at BullionVault—winner of the Queen's Award for Enterprise Innovation, 2009—where you can buy gold today vaulted in Zurich on $3 spreads and 0.8% dealing fees.
(c) BullionVault 2010
Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events—and must be verified elsewhere—should you choose to act on it.