A few years ago, central banks were selling off their gold reserves at $260 or $270 an ounce in order to buy what was then termed "higher paying assets"—usually U.S. government securities. With gold now selling at about $400 an ounce and government paper returning about 4 percent, this strategy has cost some central banks billions.
Central bankers can play these silly games because they’re playing with OPM (Other People’s Money). Individuals investing their own funds must be more prudent and far-seeing. With the U.S. dollar tanking because of record deficits, and with growing uncertainty about Iraq and terrorism, "The Gold Question" is again being asked by many investors.
The Gold Question
Gold has a traditional way
Its functions to perform;
It surges when great fear holds sway,
Then poof! The surge is gone.
When wisdom flees and faith departs
The ruling money club,
Investors tap an age old smarts
And gold’s their chosen snub.
War and oil interruptus
Bring gold bugs to the fore;
Bio threats, a plunging dollar
Can cause the stuff to soar.
As certain as the panic rush
When fear is in the air,
Is gold investors’ exit crush
When markets sound: ‘All clear.’
Some say the recent run on gold
Is just some near-term fun;
But is that brimstone in the air?
Could there be worse to come?
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