Saturday, April 05, 2008

Gold!

I still am unable to get into all of this enthusiasm for gold, but I was amused by an article in the New York Times by Jesse McKinley entitled "Soaring Gold Prices Lure New Breed of Diggers" which offers a view into the human side of the frenzied search for gold. Years ago I remember driving in the mountains in Colorado and seeing people parked allow a stream, panning for gold. I guess there is a visceral thrill to it, even if it probably isn't very economical. Although the article does point out a time-worn truth about gold:

The one gold-digging law that hasn't changed over the years is this: If you want to make money during a gold rush, don't mine the hills. Mine the miners.

...

Jerry Keene, 73, the chief executive of Keene Engineering, a leading manufacturer of mining equipment, said, "Anything connected with gold, we're just about out of."

Last month the company posted an apology on its Web site, saying a backload of orders had simply overwhelmed the staff.

Mr. Keene likened the current rush to the last time gold prices spiked this high, in the late 1970s and early 1980s, when the spot price for an ounce hit $850.

Reading that, I couldn't help but feel that this new euphoria might be a key signal that the end of the recent speculative surge might be near.

-- Jack Krupansky

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