When I was at university, one of the biggest complaints from professors and the non-finance companies that turned up on the milk round looking for graduate trainees was that the best students wanted to go into the City. Britain's brightest showed no interest in manufacturing, science, academia or even the Foreign Office - they wanted to be institutional stockbrokers.
And even if they planned to go into law they weren't intending to become criminal barristers. No, they were aiming to get their cut of City deals by being corporate lawyers.
Nothing has changed. The money available in the City is so good that it is still the first port of call for job hunters with a good degree and dreams of ever owning their own home.
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But here's a conundrum: if everyone in the City is so clever, why do they so often get things so wrong? Consider the oil price: as it soared over $40 a barrel, analysts were still keeping their forecasts below $30; even now, with prices well over $60, many are still inching their official forecasts up from $40, saving face by calling them 'long-term' forecasts.
Then there are interest rates. When the Bank of England cut rates, by a quarter of a point last year, I suggested that with inflation simmering the next move would not be down but up. I was entirely alone: everyone else was convinced that rates would keep falling. Today they've changed their minds -now they mostly think rates could soon rise.
Then there is the stock market. At the beginning of this year analysts around the world were unanimous in their opinion that the new bull market in equities had only just begun.
US investment magazine Barrons ran a cover story about its Big Money Poll, in which 'portfolio chiefs' predicted that the Dow Jones index would hit 12,000 this year. Since the beginning of May the Dow has fallen 4% and is now about 10,900.
The FTSE 100 has fallen 6% over the same period.
But the area where the City has perhaps got it most wrong is on the gold price. I first started suggesting gold might be worth buying about five years ago.
At the time I was joined only by the serious gold bugs -a group of diehard yellow-metal fans who had been keeping the faith since the early 1980s, all the way through the gruelling 20-year bear market in precious-metal prices.
As the gold price moved through $300, then $400, then $500, then $600, the rest of the investing world started to take notice, and then to pile in as the price soared through $700. Then, just as they all agreed that a bull market in gold might well be under way, the price fell 20% in a matter of days. Markets are cruel places.
So what next for gold? The basic case for it remains exactly as it was before the correction. On the supply side, things look tight. World mine production has not increased since the end of the 1990s, and in 2004 even fell 5%. This is because exploration and hence new production was heavily cut back during the long bear market.
It is now being stepped up, but that doesn't mean that mine supply will be rising in a hurry: it takes several years to get a new mine up and running. Yet while the supply of gold has been drying up, demand is still rising.
Gold is the ultimate safe haven. It is a hedge against all the bad things that can happen to economies and to currencies so, the more things there are to worry about around the world, the more attractive it looks. And there are plenty of things to worry about.
There is the dollar which, with the US trade deficit running at over 6% of GDP, is still extremely vulnerable. There is inflation, which appears to be rising around the world (the US producer price index is running at an annual rate of around 4%).
There is the interest-rate environment: most central banks are now biased towards raising rates and South Korea spooked the market with a surprise rise last week.
It is also worth noting that there are big new buyers of gold out there: not only are long-term institutional investors stocking up, but plenty of central banks are too. At the end of last year Russia's central bank announced plans to double its reserves from 5% to 10% of its total foreign reserves, and the Chinese authorities have similar intentions.
A few weeks ago I suggested cutting your gold holdings ahead of a correction in the price. That correction is now under way.
It may have further to go, but with the global economy looking even more likely to turn nasty than it did when gold was at $700, it is I think time to consider buying in once again and I'm still a fan of the Merrill Lynch Gold and General Fund to get into the market.
As the gold bug Bill Bonner, author of Empire of Debt, puts it: 'If you buy an ounce of gold today you might regret it tomorrow, but if you don't buy an ounce of gold today you will probably regret it two years from now ... if not sooner.'
First published in The Sunday Times (11/06/2006)
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