The contrarian in me wants to short a little bit of gold because everybody seems to love it.
Dollar-bashing is fashionable nowadays and articles named "Why the Dollar's Reign Is Near an End" are in vogue on WSJ. Gold, and increasingly silver are the "place to be"? This vaguely feels like real estate 3 years ago, with one major caveat: people don't borrow yet to buy precious metals. That, and the portability of the little shiny rounds, coupled with a number of other considerations (sovereign debt levels of the developed countries and etc.) that play in favor of gold/silver/platinum and the like.
I agree with the notion that it's not that gold is so great but the alternatives are kind of bleak right now. I think owning some stable global businesses that are reasonably priced, shareholder-friendly, have healthy debt levels (somebody recently said that right now a CEO who hasn't issued debt should be fired) and generate dividends may make sense to some of us?
However, my gut tells me that more or less everything looks kind of fully-priced right now. Granted, sitting on some zero-yielding scary deteriorating safe haven no more paper is a tricky proposition. But what if China slows down, Fed gets a bit more hawkish and Middle East cools down a bit? If we deem worst-case scenario as probable why not deem the opposite as possible? I might be 1000 percent wrong but I fail to see people exchanging little silver bits for coffee at their friendly local coffee shop in the next 12-24 months.
Yet, I know that gold has something that paper dollar does not. Have you held an ounce of gold lately on the palm of your hand? When you do you KNOW it's money.
"Gold still represents the ultimate form of payment in the world. Fiat money in extremis is accepted by nobody. Gold is always accepted."
Alan Greenspan
P.S. I am still waiting for a correction here. Will the end of QE2 bring us some long-awaited discounts?
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