No aureate laureate
Joe Kennedy, father of the US President Jack Kennedy, always said that in the stock market one should leave the last 10% to somebody else. An equal insight is that when commentators are universally in agreement, it is the time to do the reverse in investment terms.
I have a long standing friend who was a brilliant professional fund manager. During the summer he specifically forecast the sub-prime crisis and its impact on investor and consumer sentiment. However his clearest injunction, made over two years ago, was to buy gold. At the time this was a distinctly minority view.
Now one is not allowed to make generalisations about people, even if favourable. However I shall risk it by saying that he is part of what is probably the most commercially successful community in the world, namely Parsee Indians. The Tata group aspires to own Jaguar and Land Rover, whilst introducing the Nano car which will revolutionise accessibility to the car in India. Parsees are brilliant business people.
Today gold is soaring, well beyond any dollar weakness. Suddenly $1,000 a troy ounce is in sight. Many articles are being written to explain why – rising inflation, interest rates likely to decline, a shortage of supply. It was ever thus in the investment world - rationalisations after or during - but not before the event.
However a poll carried out amongst analysts by the London Bullion Market suggested that 60% now believe gold will reach $1,000 this year. So, if history is a guide, we still have some way to go.
And as Sir Peter Tapsell has consistently reminded us, who sold gold at rock bottom prices, at precisely the wrong time? This decision was not driven by external events; it was announced out of the blue.
It is one of the most catastrophic and expensive financial misjudgements ever made in this country’s long history.