Thursday, September 8, 2011

If You're Looking For Bubbles, Don't Look at Gold Coins

Constantin Gurdgiev

Globe and Mail Blog
Posted on Wednesday, September 7, 2011 12:01PM EDT

Dr. Constantin Gurdgiev is Head of Research with St Columbanus AG and the adjunct lecturer in finance with Trinity College, Dublin
Of all asset classes in today’s markets, gold is unique. And for a number of reasons.*
Firstly it acts as a long-term hedge and a short-term flight to safety instrument against virtually all other asset classes.** Secondly, it supports a wide range of instruments, including physical delivery (bullions, coins and jewellery), gold-linked legal tender, gold-based savings accounts, plain vanilla and synthetic ETFs, derivatives and producers-linked equities and funds. All of these are subject to diverse behavioural drivers of demand. Thirdly, gold is psychologically and analytically divisive, with media coverage oscillating between those who see gold as either a long-term risk management tool, or a speculative “bubble”. LINK...