Skepticism Still Abounds

Clearly, there's still skepticism about gold even though its bull market has been running for ten years. An article in the U.K.'s InteractiveInvestor, discussing the World Gold Council report showing gold demand outpacing supply in tonnage terms last year, has two quotes from gold skeptics with only one from a gold bull. Here's the first

Patrick Connolly, financial planner at AWD Chase de Vere, said: "Gold has risen hugely over the past decade and the easy money has been made. It would be no surprise if the price of gold falls over the next 12 months and it could fall quite fast.

"Asset prices tend to overshoot in bull markets and fall too heavily in bear markets. If the price of gold does continue to rise this year it is likely that the fallback, when it happens, will be even more dramatic.

"We are wary of investing money into any asset that has risen so much in value and encourage investors not to be enticed by short-term market sentiment or recent past performance."

The second quotee, a financial planner at Thomas Westcott Financial Management, says he expects gold to fall as governments get their fiscal houses in order.


Even with gold's run, it's not that hard to find gold skeptics. In fact, gold's bull market tends to make hardened skeptics dig in their heels right now. If gold was overpriced at $1,000, how much more so at $1,400! I should add that many of the skeptics are so out of ignorance.

The best market for wearing down skeptics on their own is like the one we have now: advances followed by pullbacks followed by consolidations, over a long period of time. A rip-roaring bull market doesn't deter skeptical professionals per se: at that point, they tend to give in because angry clients and/or bosses yell at them for missing out. They tend to capitulate cynically at that point, and join in at the blow-off top.


While we're on the subject, here's a reminder of how wavery the coverage was back when gold hit $1,310.

[R]eports were everywhere that gold was in a correction and prices were on their way down to $1275 an ounce - maybe even $1225. Expert after expert was paraded past us on the financial channel, saying gold was losing [its] luster and that the Fed's QE policies were going to drive stocks to the moon.

Now... gold has some surprises of its own. Warren Buffett is said to be selling stocks and gold did the opposite of what the geniuses said it would do. Not only did it not drop below $1300, but, today it rose above $1400. Let's not leave silver out of the conversation, either. Less than 30 days ago silver spot dropped as low as $26.50 an ounce. Today, it broke above $34 for a short time.

The wall of worry still stands.