{"id":655,"date":"2012-12-21T11:10:50","date_gmt":"2012-12-21T11:10:50","guid":{"rendered":"http:\/\/www.thebizsense.com\/views\/?p=655"},"modified":"2012-12-21T11:10:50","modified_gmt":"2012-12-21T11:10:50","slug":"prepare-for-a-mania","status":"publish","type":"post","link":"https:\/\/www.thebizsense.com\/views\/investments\/prepare-for-a-mania","title":{"rendered":"Prepare for a Mania"},"content":{"rendered":"
\"American<\/a>

American commentator John Dizard<\/p><\/div>\n

Gold: Earlybirds Prepare for a Mania<\/p>\n

The continuing avalanche of digitally-created money and nearly-free credit provided to the megabanks \u201cmeans that a hyperbolic, 1979-1980 style blow-off in the gold market is becoming more likely,\u201d says the FT\u2019s well-known American commentator John Dizard.<\/p>\n

Demand for the yellow metal has been supported by a gradual shift from net central bank selling to net central bank buying, and by the interest of professional investors. The broader public has not yet really been drawn into the market. When that happens, it\u2019s likely to produce a repeat of the gold mania seen in the late 1970s.<\/p>\n

One friend of mine, who has 90 per cent of his personal wealth in physical precious metals, says gold could eventually soar to above $10,000 an ounce, in perhaps five to seven years\u2019 time, driven by panic over a feared collapse of the global financial system produced by absurdly excessive money creation.<\/p>\n

This is not such an extreme viewpoint as you might think. The well-known strategist and commentator Christopher Wood of CLSA Asia-Pacific Markets, for example, recommends that long-term US dollar-denominated investment funds have 45 per cent of their assets in gold bullion and 20 per cent in unhedged gold mining stocks.<\/p>\n

Dizard points out that although the miners\u2019 shares have disappointed relative to the metal in recent years, they rose twice as fast in the last quarter.<\/p>\n

So far \u201cmoney flows into gold stocks have been modest, and valuations relative to the cash flows or the net asset values of gold reserves are still fairly low. There hasn\u2019t been any flood of dubious junior mining stocks based on pieces of moose pasture in Northern Ontario or desert in Nevada.\u201d But \u201cno doubt that will all come.\u201d<\/p>\n

Interesting recent pointers to rising interest in gold include:<\/p>\n