MIDAS TOUCH? Not so much. Gold—that seemingly invincible investment and go-to inflation hedge of many a hedge fund, survivalists, Glenn Beck, and hedge fund managers who sound like survivalist friends of Glenn Beck—took a deep dive this morning. The reaction to it has a pretty excitable ring to it, one that sounds awfully familiar: that of people taking an inordinate amount of pleasure with the fall of gold. Kind of like schadenfreude (a regular occurrence in finance, usually for no other reason than having some skin on the other side of a bet) except with gold, it’s different. People love—or at least: seem to truly enjoy and indulge in—the hating of gold bugs. Why?
Let’s start with a Tweet from CanadianMarketWatch and this morning’s Bloomberg filing, titled Gold Tumbles Most Since December 2008:
Gold plunged in New York, heading for the biggest drop in 18 months, on speculation that financial markets may be stabilizing, eroding the appeal of the precious metal a haven. […] “This is just pure panic selling,” Frank McGhee, the head dealer at Integrated Brokerage Services in Chicago, said in a telephone interview. Before today, gold’s 14-day relative strength had been above 70 since Aug. 8, a signal to technical traders that prices are poised to fall.
And that was before it started dipping again:
Twitter, if you know where to look, resembles something like a ringside aisle near a contender being speechlessly and mercilessly beaten to a pulp. There’s far more bloodthirst to be found than a simple LOL. A moderate sampling:
Gold—especially by consumer/retail investing standards—has become bit of a pedestrian play over the last four years due in no small part to the proliferation of secondary and tertiary “markets” (CASH 4 GOLD, for example) and widespread stories of hedge fund managers getting rich off the stuff in big plays (David Einhorn, John Paulson). Because of this, talk about gold generally seems to be split into three parties:
- There’s everyone who went in early, got paid, and will use any occasion to tell everyone else they were right.
- There’s everyone who wants to get paid, recently bought in, and will use anything as a great reason to tell everyone else to buy.
- And then there’s everyone else, who think gold investors are slightly unhinged, if not total idiots.
Of course, that arrogant first group is always an easy conductor of virtrol: the risk of unchecked ego being checked usually rises with its outgrowth.
As for the second group, it’s made up of people so painfully lusty for what those who bought gold earlier earned that:
(A) They’ll find any excuse to tell others why they’re wrong by not taking a position favoring gold, which
(B) Has elicited the Twitter joke-as-hashtag “#BuyGold,” wherein anything from a dog winning the Westminster show to the weather changing directions becomes a reason to buy gold.
Given the circumstances, gold’s naysayers have plenty of ammunition: anybody with unilateral views hostile to having those views questioned is likely the exact kind of person who should have their views questioned. But gold bugs might be slightly easier to ignore if it hadn’t taken on such a retail quality appealing to (or exploiting) willing Johnny-come-latelies, or the kind of press that screams at everyone from the sole vantage point of “you could’ve bought the Mets with gold money, too.”
As such, it might be easy to see why gold falling would correlate with an inordinate amount of schaudenfreude—or goldenfreude—rising. A mathematical example? Even Nouriel Roubini—who used only one Tweet yesterday to extol the virtues of his own consistent (and consistently loud) opinion on Dominique Strauss-Kahn—has used not one, not two, not three, but at least seven Tweets as of this writing expressing some form of glee at a three-day fall in gold, with no indication of slowing down at the moment. Granted, this is his shtick (see: being correct about something, and then screaming about it until he becomes The Mascot For Being Correct About Something), but in this glee he’s far from alone.
Ben Davies of London-based Hinde Capital (which manages the bullion-buying Hinde Gold Fund) would agree: “Usually all the gold bears come out the woodwork crowing – on any correction,” he noted over email, citing—of course—Nouriel Roubini. And this, today? “This is a much needed and healthy correction. Physical demand we are experiencing is high and this pull back will only fuel the surge above $2,000 over the Asian buying season.”
It was slightly more humbled than an emailed discussion with Mr. Davies for a previous piece:
Gold, as our very own Chris Powell (GATA) never tires of telling me, is the centre of the universe, and truth be told I never tire of him saying it. The symbol for gold – is an eye in a circle – from the Egyptian for the Sun God – Ra. It means all seeing. The steady rise in the price of gold is that of knowledge. Gold is all knowing. Like our own visual cortex is gold predicting an outcome?
Maybe, when gold picks itself up from today’s loss, gold bugs may bug anybody within earshot a little less, and truncate their gospel. Maybe then, in turn, the bloodsport of Goldenfreude would tone itself down as well.
Then again, if the comments on a recent Business Insider post—ever a decent temperature-taker of certain investors’ sociopathic id—are any indication, the amusingly vicious cycle of gold bugs’ buzzzing and being stepped on is going nowhere anytime soon.
fkamer@observer.com | @weareyourfek
