Recently, the London auction house Christie’s offered for sale what it described as a ‘stunning piece of jewelry’. Christie’s advertised a solid gold bracelet that’s about 3,000 years old. It dates to the Iron Age, and was unearthed — yes, dug out of the ground — in Portugal, or old pre-Roman Lusitania.
Per the Christie’s fact sheet, the bracelet contains 599 grams (over 21 ounces) of gold. Also, according to Christie’s write-up, this item ‘clearly demonstrates the technological advancements of the Iron Age,’ including the use of high-temperature furnaces and intricate tools specialized for metalworking
What is the bracelet worth?
Just the gold alone would fetch about $32,000 at current prices. Then there’s the value of piece as both art and a historical artefact. Thus, the bracelet sold in London, at Christie’s, for nearly $805,000.
What’s the lesson? If archaeologists are correct — let alone the Christie’s auctioneers — then gold and precious metals have been a haven for wealth protection for millennia. Still, why discuss this ancient Lusitanian bracelet?
Because there’s an important lesson here. This 3,000-year-old relic is more than just a museum curio. It speaks volumes about why we should respect one of mankind’s oldest forms of money, and not walk away from gold in the face of its recent price decline.
Indeed, the mainstream media is all but reading last rites over gold. Yet I foresee new opportunities, and I don’t mean mere ‘walking dead’ investment analogies. No, I believe that, like that bracelet from Lusitania, gold will continue to come out of the ground and offer great wealth and security to those who are brave enough to stick with it.
Rumours of Gold’s Demise Have Been Greatly Exaggerated
What did Mark Twain once remark about his obituary, published in a local newspaper? He said, ‘Reports of my death have been greatly exaggerated.’ It’s the same thing with gold.
We’ve had a superb, 10-year run for gold pricing. Yet we recently experienced a big sell-down. After a decade-long, relatively steady rise, gold prices plummeted from the $1,700 range per ounce to $1,400.
Media accounts — many from the usual suspects — relate that gold is no longer a safe haven for either wealth protection or long-term gains in the face of global inflation. This line of anti-gold argument seems to have popped up on the screen exactly when investors everywhere seek a safe haven in rough economic seas. Like the man says, be careful what you read in the newspapers.
In a curious twist of fate, while the ‘paper’ price for gold plummeted, buyers everywhere walked into gold shops and souks and walked out with everything they could carry. Chinese buyers scooped up physical gold literally with both hands.
What’s happening in China reflects what’s happening across the world. Individuals are protecting themselves against an oncoming monetary storm. At the retail level, people are buying gold, and lots of it.
From my perspective, it’s a harbinger of things to come, and one of the few times you’ll ever see ‘small guy’ investors take a position ahead of the so-called ‘Big Money’. That is, usually, the little guy is late to the party. Not now.
The Big Gold Mining Smackdown
The divergence between paper gold and physical metal helps explain what happened with ‘Big Mining’ in recent months. Consider some of the top names, like Barrick Gold or Freeport-McMoRan Copper & Gold.
Gold, silver, copper and base metal miners have all had a tough spring in the share trading pits, losing significant value. It was a smackdown worthy of professional wrestling at its best. What happened?
Well, there’s a strong disconnect between the nominal paper price for gold and personal demand for physical metal. Thus, large institutional money has exited the mining space.
That is, gold (and by extension, gold miners) may be an investment for individuals over the long haul, but in the short term, people who run big, institutional money don’t see it that way. They fail to see what they call ‘growth’ in the sector and head for the exits.
Right now, large money managers, pension funds, hedge funds, etc., are choosing to buy government and corporate bonds, and bondlike equities, rather than gold. Institutional money has taken the Dow Jones index up to 15,000 and more, while walking away from gold, which — see the Christie’s auction, above — has been a store of wealth since long before the days of the Roman Empire.
There’s an ‘apples and oranges’ investment issue here. Individual investors can think long term, even over generations. Individuals, however, are not constrained like pension funds, with quarterly performance mandates — for example, ‘assumptions’ of 8% annual returns in a world of Sahara-like overall yields.
Thus, individuals make long-term choices to protect their wealth in gold. Meanwhile, institutions and other Big Money buffaloes follow their herd instinct.
for The Daily Reckoning Australia
From the Archives…
Truth or Dare Time for the Investment Industry
14-06-13 – Vern Gowdie
The Launch of Revolutionary Tech Investor
13-06-13 – Kris Sayce
The Architecture of Oppression
12-06-13 – Dan Denning
The Upside of a Dive to 85 for the Australian Dollar
11-06-13 – Dan Denning
Courting Controversy Over Australian Property
10-06-13 – Dan Denning
Latest posts by Byron King (see all)
- The Investment Hidden By Layers of Chinese Air Pollution - October 26, 2013
- US Rust Belt Boom: Oil Investing for the Next 100 Years - October 14, 2013
- Cyberwarfare and the Profit Opportunities It Gives You, the Investor - September 10, 2013
The Denning Report ‘Three Trends’
‘These three trends are mostly likely to impact your investments in 2014.’
Dan Denning here. In this new report I do three things for you. I recount some of the market predictions I made for the year just gone, 2013. Then I announce three new predictions I’m making for 2014. And I'll give you some ideas on how to rearrange your investments in the event that these three forecasts
become reality. Click here to read.
Sound Money. Sound Investments. ‘bullish prediction’
Greg Canavan's first bullish prediction in four years
doesn't make forecasts like this often.
When he does, it's because he’s found something that could make you money for years to come.
Best Investment Ideas 2014
Rick Rule (Featured Video)
Resource Investment Guru Rick Rule, Reveals His Top 3 Commodities
Australian Small-Cap Investigator ‘ASX 15000′
If you thought last year was a great time to get rich from stocks, get ready for…
And your chance to buy six 'bull market beauties' that could shoot up to 921% higher as the ASX triples over the next 2 to 4 years
Diggers and Drillers
3 Stocks that Could Create a 'New Class of Millionaires'
What if you could buy just three stocks and be done with investing for the rest of the decade?
Which three stocks?
You can find out here in this controversial new report by Jason Stevenson.
In it Jason shares evidence that a new and different kind of boom is already underway here in Australia. And a new breed of ASX mining stock is about to lead the whole sector out of the wilderness.
More recommended reading...
Remembering the Future
Would You Be Happy Renting for another 14 Years?
Perhaps you've been waiting for real estate prices to fall before buying…
But what if they don't fall?
Prices are actually on the up. And one economist says they'll keep going up…and up…for another FOURTEEN YEARS.
To find out more, go here.