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.