Meme of the week: Gold rush
November 14, 2009
The gold rushes of centuries past were fundamentally irrational endeavours led by little guys looking to strike it rich.
The “gold rush” of this week was triggered by the coolly rational manoeuvrings of one of the world’s big guys: the Indian central bank, which made a $6.7 billion gold purchase last month in an effort to diversify its holdings in response to the ongoing decline in the value of the U.S. dollar.
Then, perhaps predictably, came the frenzy. As investors by the thousands took the advice of gold-advocating Fox News demagogue Glenn Beck, the price of an ounce hit a record $1,123.40. While even conservative central banks may continue to buy – Asian and Middle Eastern countries are likely candidates – the delirious speculation alarmed some analysts. “This,” one told the Associated Press, “isn’t materially different from gambling.”