Gold News

Gold's Stealthy Bull Move

Gold, the ultimate "other asset class", just leapt to a 7-month high...

The GOOD BOOK tells us that death comes like a "thief in the night," writes Eric Fry, reporting from Laguna Beach, California for the Rude Awakening.

The death of anything precious – whether that be life, love or a bull market – occurs in the twinkling of an eye. But the response to that death is anything but sudden. Instead, it is protracted, agonizing, confusing and uneven for those who remain to mourn.

One moment, you tell yourself you're over it; the next moment you're watering a snapshot with tears. One moment, you're celebrating the joys of the past; the next moment you're mourning the foregone joys of the future. One moment, you're grateful that you've recovered some of your capital losses; the next moment you're lighting a candle for the capital still missing in action.

So I say that the experience of death – for those who are still living – is like a set of rogue waves. There you are, just splashing in the gentle surf when, all of a sudden, the first huge wave sweeps through. Bam! Death arrives. It's not YOUR death, but some precious part of you is gone forever. So you're pulled under the wave; you're tossed around; you can't breathe; you think you'll never see the blue sky again.

But then, just as suddenly, you're bursting above the surf...just happy to be breathing. Everything is fine and safe...until the next wave. Rinse and repeat. After the last wave finally passes through...and you're still breathing, you usually emerge from the surf with a combination of gratitude and resolve. Grateful the experience wasn't more painful; but resolved to avoid any similar pain in the future.

In life, avoiding the pain of bereavement is all-but-impossible. The death of a loved one is just that and there is no way around it. In love, avoiding bereavement is possible, but not altogether satisfying. You avoid agony by avoiding ecstasy. Mick Jagger may have said it best when he sang, "I just can't pour my heart out to another living thing...I won't cry when you say goodbye, I'm all out of tears. I won't die when you wave goodbye; I'm out of tears."

But what is love without risk? Perhaps it is merely "to like" or feel "you're a neat person." Without risk, love will never say, "I miss you so much I want to cry....I miss you...I can't stand not seeing you tonight." And without risk, love will never say these words and then sleep with your best friend. You can't avoid it. Either you take the risk or you don't.

But financial markets are a little different from both life and love. There are similarities, of course. The death of a bull market also arrives like a thief in the night. And the sufferings of investors also resemble the fate of swimmers in the path of rogue waves. But there is one major difference: the investor does not HAVE to remain in the water until the wave approaches. The very same reckless abandon that animates relationships, nurtures passions and, in short, makes life worth the same quality that causes investors to lose a fortune.

There's no romance on Wall Street. It's no place for reckless abandon. There's no reason to suffer bereavement for your capital. Participation is purely optional. So when things start looking a little "sketchy", it's perfectly okay to back away. It's okay to cash in a few chips.

It's also okay to buy an asset that does not trade under the stock symbol, "GS" or "BRK/A". It's okay to imagine that things might not go perfectly. In fact, it's not only okay to imagine adverse outcomes, it's also okay to plan for them. Mr. Market will not notice if you're getting intimate with another asset. And even if he did notice, he would not care.

Gold, the ultimate "other asset", has been making a bit of a move lately.

We have no idea if this recent move is the start of something new or just a "jiggle" as Jimmy Rogers would say. What we do know is that gold is nobody's fool. Like a kind of monetary prenuptial agreement, gold exists to settle the score when things go badly.

Gold also exists to settle the score when governments become unfaithful stewards of the currencies they issue. And right now, it says they've strayed and betrayed the money they need us to love.

Ready to Buy  Gold...?

Eric J.Fry has been a specialist in international equities since the early 1980s. A professional portfolio manager for more than 10 years, he wrote the first comprehensive guide to American Depositary Receipts, International Investing with ADRs. Today he reports on Wall Street from California for the renowned Daily Reckoning email service.

See full archive of Eric Fry articles

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

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