Dismissing Gold In The Past Led To Some Hard Lessons

Dismissing Gold In The Past Led To Some Hard Lessons

Back in December 1997, the Financial Times ran a now-infamous article titled "Death of Gold." In it, the author Kenneth Gooding claimed that as an investment, "gold is a goner." The crises of the past 10 years—the 1987 stock market crash, the Gulf War, Asia's financial meltdown—had not resulted in higher demand, as one might expect. Gold was now a "mere metal" and a "bad investment," Gooding concluded. But as it happened, reports of gold's death were greatly exaggerated. The next decade saw the precious metal steadily rise in price, eventually hitting a then-record $1, 921 an ounce in August 2011, for an increase of approximately 580% from when the Times published its obituary. Fast forward to today, and the same gloomy prognoses are being made about the "barbarous relic," often by people who least understand it. And just as Gooding was proven wrong, today's doomsayers will end up with egg on their face, I believe. Consider last week. Gold performed as expected rising 2. 56%, following a monster consumer price index (CPI) report that showed inflation skyrocketing 6. 2% in October compared to last year. After advancing for a seventh straight trading day on Friday, its longest winning streak