-->The Dec. 1 issue of The Economist has a wonderful
article on gold titled “The Little Yellow
God.” The subtitle reads, “Even at $500, it’s still a
barbarous relic.” The article then goes on to poke
fun at goldbugs, making a grumpy case for why
gold’s current price means nothing at all. The
piece is more sour grapes than anything - if a
magazine article could harrumph, this one would.
For gold investors, this is wonderful news. If
The Economist had been excited and enthused
about gold’s prospects at $500, that would have
been cause for worry. You see, the magazine is
more than just a top-notch info source. It also
serves as an excellent contrarian indicator for the
big tops and bottoms.
After two years of downward descent, The
Economist caught the dollar bottom almost perfectly
in December 2004. Not on purpose, of course:
The relevant cover that month was “The
Disappearing Dollar,” questioning whether the
greenback was on the verge of accelerated
freefall. With impeccable timing, multiyear lows
were established soon after, and have not been
visited since.
But that call was small beer compared to
March 1999, when our beloved Economist ran the
infamous cover, “Drowning in Oil.” (Probably a
collector’s item by now, it is the crown jewel of my
Economist collection.) In that issue, we learned
why oil, just above $10 a barrel at the time, would
soon be headed to $5. Crude never did see $5, of
course, or even single digits - and today seems
more drawn to triple digits instead.