The Golden Archetypes

Since the past “recession” of 2007, every now and then the mainstream financial news outlets mention that the price of gold is on a rise. There will, of course be an expert interviewed who will offer an opinion. Being novice to the “gold business” it is not easy to decide whether the person you listen to is trustworthy or not. And if you start researching the subject you will come across these very convincing sounding people with these “unorthodox” ideas about the current financial and political system and they will have their own, very strong opinions. In this kind of environment it is not easy to decide the angle of the different people you hear and their motives. So I have prepared this post, presenting what I believe to be the four archetypes of those who talk about gold in various media.  These four archetypes are those who fall under the stigmatization of “conspiracy theorist”, the mainstream economic advisers, those who actually trade in precious metals and commodities on a daily basis and those who have a vested interest in you buying gold from them. Read more for a more detailed presentation of each archetype.
In all fairness I call the first group “conspiracy theorist” not because they are all convinced that the Bilderberg Group is running the world. Some of them are well established economists/journalists but because they very frequently don’t abide by the classical and mainstream points of views they are often stigmatized as “loony”. None the less, a common feature amongst most of these people is that they have been promoting and suggesting the buying of physical gold for years. The reason why they advocate this is because they have an inherent distrust in the current global economic system. Many of them, if not all, are convinced that the current systems, both political and economic, are on the brink of collapse and, if anything, physical gold, that you actually possess yourself, is the best way of preserving the value of your savings.
The second archetype consists of the mainstream economic advisers. The general consensus amongst these is that gold has no real industrial value (in contrast to silver) and besides being a shiny metal with affectionate value it has very little to offer. They see gold as an old form of trading currency that has been replaced with a modern flexible form of papers and computer systems. As such, they are quick to point out that other investments have historically been a lot more fruitful. Most of these advisers know little about gold and commodities in general. Some, however, follow the trends in gold and are open minded enough to recommend gold as a hedge against fluctuations in the other markets. But the general advice from them will be, don’t buy gold, there are other options which will generate much more profit.
Since the past “recession” of 2007, every now and then the mainstream financial news outlets mention that the price of gold is on a rise. When asked about this, the mainstream economic advisers are quick to say, “yes, gold has been going up, but if you look back, historically, stocks have done a lot better”. They are also the first to point out that gold is in a bubble. The conspiracy theorist, on the other hand are (quite frequently) screaming “The end of the world is near! The global economic system is about to collapse! Buy physical gold!”. The commodity traders provide the third option. They say “if the price of gold is in an upward trend – buy; if it is in a downward trend go short”.
Then you have the people who trade in commodities day in and day out. They have a business oriented approach to gold, if it’s on its way up, and then buy.  If it is on its way down then sell or go short. They also have trend traders who make decisions on buying or selling based on the historical and statistical trends of the commodities. Depending on the time-window of the analysis used, patterns of upward and downward trends emerge. For example if you look at the hourly movement of gold on any given business day, there may be quite a lot of fluctuations. Looking at the movements over a year, however, the trends have generally been upward moving for gold since the bursting of the dot-com bubble in 2000. The general suggestion from these advisers CURRENTLY is that gold is still in an upward movement, so wait until it dips a little (still within the frame of the upward trend) and buy some more. It is important to note that these traders deal only with gold certificates, as the purchasing/selling cost ratio between these are minimal.
The fourth archetype consists of those who have a vested interest in selling you gold. Probably because they are gold-retailers who want you to buy gold from them. Obviously, they will always say: buy, buy, buy, regardless of the current market. Of course, that doesn’t mean that they are wrong, but they will advise to buy even when it would be better to wait. They often deal with physical gold.
So, next time you read about gold and whether it is a good investment or not, try to place the person talking in one of the categories I mentioned and that will help you determine their angle.