Thursday, December 17, 2009

Musings on Gold...GOLD! Buy GOLD! The World is Going to End Anyway

It seems like gold has been appearing everywhere of late, especially in those late-night commercials that ask you to pick up any loose gold that happens to be lying around the house, put it in an envelope, and send to those very nice sounding people who will send you a check for your trouble. The guy is strumming a banjo; how evil could he be? And I am absolutely sure they pay top dollar to the people desperate enough to fall for the scam.

On the other hand, the FOX Channel's Glenn Beck, fear-monger par excellence, has been shilling for a gold-selling company, while at the same time using his show to advise people to buy gold in these terrifying times. He tells us to "pray over it" ("Dear God and Jesus, should I use my money to give food to the poor, or buy gold???"; I wonder what voice speaks in his head, and what it says to him?). I'm sure there is no conflict of interest here...

I started thinking about gold because one of my very first efforts at web page design (1997, I think) still sits in a largely original state on my school website, a discussion about the history of the gold mining in the Mother Lode. It talks about the value of gold at the time, and the then current state of mining. A recent visitor to the site commented the price of gold had quadrupled since I wrote the piece, and suggested that interest in mining was up again (if you check out the site, be aware that some of my numbers are speculative).

First off, does anyone know of any ongoing interest in reopening any Mother Lode mines? I'd like to know about it. I must say, that if I were already operating a mine, I couldn't be happier. Great prices! But opening, or reopening a mine? Do mining companies trust that the price of gold is going to remain stable or continue to rise? Enough to make the incredible investments in equipment and regulatory paperwork? I've gotta say that the run-up in the price is very reminiscent of the dot.com craziness of the 1990's, the stock market craziness of the 2,000's, and the real estate insanity of the last 10 years. Wow...how'd they all do? What I remember the most was the maniacal exhortations to invest, invest, invest, even as prices started to fall.

If you are thinking of falling for one of these gold investment schemes, take a look at this article by Nouriel Roubini. For the record, he was one of those gloom and doom economists who predicted the ongoing recession-depression (does anyone believe it's over?) before it was fashionable. Can you spell "g-o-l-d b-u-b-b-l-e"? It may a good time to sell gold, but I wouldn't trust a banjo-strumming confidence man. See a reputable jeweler first. As for Glenn Beck and the other investment shills? Well, consider the source...


Late Add: Seems (surprise, surprise!) that some of those commercial gold buyers have gotten in trouble. Check out this report.

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