Great news for gold – the City still hates it

I was talking to a group of fund managers last night, and I asked them how they felt about gold going above $1,000 an ounce. I didn't expect a terribly enthusiastic response. But I did expect them to perhaps say something about the weak dollar; or something about inflationary fears; or perhaps even something about investment demand from the Chinese. In short, I thought they'd at least take the question seriously.

I was talking to a group of fund managers last night, and I asked them how they felt about gold going above $1,000 an ounce. I didn't expect a terribly enthusiastic response. But I did expect them to perhaps say something about the weak dollar; or something about inflationary fears; or perhaps even something about investment demand from the Chinese. In short, I thought they'd at least take the question seriously.

Instead I got virtually open derision. This amazed me. These self-same fund managers who minutes before had been earnestly debating the merits of cyclical stocks priced at 30-odd times earnings, were now dismissing out of hand the one asset that's been in an unquestionable bull market ever since Gordon Brown sold off Britain's reserves in the early part of this decade.

It also cheered me enormously. If these guys still haven't changed their minds that gold is a 'barbarous relic', an asset class fit only for the superstitious and the hysterical, then it means gold's bull run has plenty of room to go. Remember the salesmen in the City and on Wall Street brought you the tech bubble and the banking bubble. They're the ones who tried to sell you commercial property funds as a safe route to a 'diversified' portfolio, right at the top of the market. So if they hate gold well, that's about as good a recommendation as you're going to get.

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John Stepek

John is the executive editor of MoneyWeek and writes our daily investment email, Money Morning. John graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news. John joined MoneyWeek in 2005.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.