Why You Should Consider Selling Your Gold Jewelry
One of my favourite poems is The Second Coming by WB
Yeats. The poem was written in 1919 in
the aftermath of the first World War and the Nigerian author Chinua Achebe
later wrote a Totemic Book in 1958 where he lifted the words 'Things Fall Apart'
for his title and both the poem and the book are remarkably powerful and
resonant pieces of literary scholarship.
The opening stanza of Yeats poem begins. Turning and turning in the widening gyre the falcon cannot
hear the falconer; Things fall apart; the centre cannot hold
The reason I start with this poem is because I think it
best describes the collective mood and sentiment which has driven gold to its longest
rally since November 2009. Gold rose to an intraday record $1,594.90 an ounce
last week. Gold futures closed at the highest settlement ever. The metal gained
3.1 per cent last week and was up for the 10th straight session.
Gold is a safe haven in an uncertain world. What with Standard & Poor’s becoming the second
rating company to say it may cut the U.S.’s top credit grade. Greece now rated
at the lowest possible rating in the World, CCC, Japan has a debt load that is
simply impossible to pay back. These realities existed before but only now is
that realisation tipping in our collective consciousness.
If you had converted your heard earned shillings into gold
at the beginning of the year, your year to date return would be in excess of 25
per cent or just under 50 per cent on an annualised Basis.
The last time gold hit a cycle peak was in 1978-1979,
when the Shah of Iran was being plucked from his peacock throne by the
Ayatollah Sayyed Ruhollah Mostafavi Khomeini.
I see gold as a shoe in for $2,000 an ounce before the year
is out. Precious metals are heading for a perfect storm as the
fundamental case for owning them enters the mainstream.
When Ben Bernanke was asked why people hold gold last week, “As protection against what we call tail
risks: really, really bad outcomes,” he answered. He said this in a way that suggested
these bad outcomes (default, currency collapse, hyperinflation and the like)
are really unlikely.
Those outcomes look far more likely than Ben Bernanke is
allowing. Therefore, when you come to weigh up your assets, you
might weigh madam's gold jewelry, because it’s practically the most valuable
its ever been. Those amongst us who like to wear flashy jewelry like Michael
Sonko Esquire could always turn and say 'It’s all about portfolio optimisation, old boy!'