EDITOR'S LETTERMerryn Somerset Webb
We’re thrilled gold is falling
A mildly rude message arrives from a reader criticising our stance on gold. “Ha, ha,” he says, of the price falling below $1,100 an ounce – before going on to forecast that I will soon be suggesting that all readers “buy gold at new lower prices”. I hate to find I am quite that predictable, but that is actually exactly what I am going to do.
We are thrilled with the falling price of gold. There’s two reasons for that. The first is that we don’t hold gold as an investment any more. We hold it as insurance (we have done since 2011). And who doesn’t want the price of their insurance to go down? Good news indeed if we feel like buying more.
The second reason is that there is a faint (very, very faint) chance that gold is going down for the right reason. Central bankers have got monetary policy 100% right. They’ve reflated our economies, created an environment where debt doesn’t matter, found a way to make sure that all these years of money printing never comes back to bite us as inflation, and are well on the way to normalising interest rates. If that turns out to be the case – and clearly a good many people think it is – you will find great joy in the MoneyWeek office.
We run a business that relies on people being able to save and invest and we all own assets too: I might have more actual cash in my self-invested personal pension (Sipp) and individual savings account (Isa) than most people, but I’m up to my ears in equities and property too. If all is well in the world – and the prices of all my other assets just keep going up as a result – gold can go to zero and I’ll still be a very happy woman.
But here’s the thing. I really don’t think that we can say, hand on heart, that it is.
• Read the full editor’s letter here: We’re thrilled gold is falling