Financial Markets

Gold in retro-perspective

In turbulent contemporary times, investors tend to be more and more conscious of the fact that times of inspiration, speculation, feeling in the financial markets have passed. And if not passed, at least changed. You buy today, you sell tomorrow. Or you buy now, and sell later. It’s crazy! You can barely think about long-term investments. I mean building a portfolio as a wedding gift for your children. Unless you are a genius…but who believes in geniuses of financial markets? Oh, yes. There is a group of so-called geniuses of the 2001.

I’m sure that the first thing you must be thinking of is the real estate. And yet, compared to the real estate, gold has been going way above imagination! I think the most appropriate approach is history-connected. I mean...ok, these guys might as well have been geniuses, but even if so, there must have been a “flashing star” , a divine source of inspiration, something.

In every pre-recession period, there is this longtime myth of gold saying that “gold did not fall during the Great Depression”. True indeed, just that the 1930s experience is economically irrelevant for our times. What happened next? Well, gold fell in the 1974/75 recession. Began to rise by almost 50%, and again fell in the 1974/75 recession. Again fell in 2000 prior to the 2001 recession. It was high time people knew how it worked! And there arrived the geniuses investors! In the 2001s they bet on gold. And they did right. After 20 years of undervaluation, gold got back on its track. And in the last 7 years, we have assisted to remarkable changes, exhibiting any expectations. $268 in February 2001 to $960 in February 2008.

What should we learn from that now? Well, it’s quite clear: on one hand, in the recession time, price tends to fall. Why? Because people are desperate for cash. They fear. The marginal sellers become more active than the marginal buyers, and, like for every market that responds to supply and demand, the asset holders see their assets going down. On the other hand, in times of high price inflation gold is bought as a store of value, naturally leading to a support for the price of gold.

There’s just one “detail” to clarify. What are we heading to? Analysts see different messages from the Fed, trying to choose the most relevant between recession and accelerating price inflation. Looking back, it makes sense now. I think it won’t be the case about talking of a new generation of geniuses. We just have to stay posted, there’s one way or the other.

For the better times ahead!

Live and die on Wall Street

When you think about history, our history to be written, don’t you try to find central words that could develop into central meaning topics? I do. Lately, I am becoming more and more confident that I might have some right answers. For instance, I would bet on the Wall Street!

We all have ‘trendy’ lives, we are all into a 'trendy movement'. It’s not just fashion that makes trends, some good mathematicians could easily prove that everything is on a trend: manner of living, consumption, levels of saving and so on. Nowadays, it becomes more and more in fashion to be an investor. Hedger, speculator, arbitrageur? You can be the three of them at the same time without even being conscious of that. I watch people reading newspapers while going to work in the morning. Subprime crisis? They all know about that. Maybe most of them don’t understand what it is all about, but you could actually discuss Wall Street instead of weather without even noticing the difference.

Moreover, I have recently discovered another way of considering time, other than the well known Greenwich Meridian Time. It’s the stock exchange time. It starts also at 0 GMT with the Tokyo Stock Exchange. After that, you just have to pay attention to an ordinary ticking clock and take position at 8 GMT with the London Stock Exchange or the Paris Stock Exchange and go on like that for the New York Stock Exchange followed by the Chicago Stock Exchange , to count a 24 hours cumulative time. The 24 hours tour? I think that’s a sign. A sign that the stock exchange could actually fulfill a man’s day. If you don’t take it for a job, you take it for a hobby. If you start doing it by curiosity or necessity, you’ll finish up getting passionate of it. And if you are still not directly implied, indirectly we are all there. Because that’s where all great cash is. If you do some simple arithmetic, you could find it surprisingly easy to buy some good percent of the world’s total assets with one day’s cash flows at the stock exchange.

So I say…why not think big? It’s a natural law that where there’s much to gain, there’s much to lose. But aren’t we all curious to find out how much risk we are able to take? As for me…I would die to live on the Wall Street!