Gold's Strange Bedfellows

Today Floyd Norris ponders the rise in the price of gold in a NY Times piece, which perhaps more accurately could be titled "Let's Hope the Price of Gold Crashes".

I encourage you to read it in full, but if you don't have time it can be simply summarized as yet another gold hit job by a major media organization. Wall Street Journal opinion makers had previously been leading the anti-gold media charge; in particular investing 'guru' Jason Zweig and Matt Phillips of the MarketBeat blog have both bad mouthed the barbarous relic. Perhaps the NY Times is now aiming to give the WSJ a run for its anti-yellow metal money?

What Zweig, Phillips and now Norris have perhaps all failed to realize is that in barbarous monetary times, relics do well.

However, the above journalists' dislike of gold doesn't compares with the vitriol from Warren Buffet's longtime partner at Berkshire Hathaway, Charlie Munger. In what is a clear case of hating on both the game and the playa, Munger calls all gold owners "jerks".

If the fiercely competitive and politically opposite WSJ and NY Times seem like strange anti-gold bedfellows, consider the following bizarre 'gold lovers': followers of media shock jock Glen Beck and the hedge fund investor he refers to as a "economic war criminal", George Soros, both own loads of gold; countries as culturally and economically diverse as Russia, Mauritius, India, Saudi Arabia, Sri Lanka, Iran, Bangladesh and China have all been increasing their gold reserves; citizens have been acquiring Au in both economically underperforming America and booming Germany, where Frankfurt university professor Wilhelm Hankel recently remarked:

"You cannot find a bank safe deposit box in Germany because every single one has already been taken and stuffed with gold and silver. It is like an underground Switzerland within our borders"

Returning to Norris' article, he speculates that part of the appeal of gold is that it serves as a proxy ballot box for the general dissatisfaction people feel towards the inability of their political leaders to tackle economic problems.

In other words, the rising price of gold reflects an investor vote of no confidence in the world's economic leadership. But besides Munger, can anyone really blame investors for feeling this way?