Last month, I happened to visit New York’s Tutankhamun exhibition, to chair a dinner conference on gold exchange-traded funds (ETFs). It felt like attending a church revival meeting. As I faced a crowd of well-dressed financial advisers from premier Wall Street banks, there were cheers and rapt applause. There were even a few angry, wine-fuelled heckles when I dared to ask if gold was in a bubble. This was not your normal investment event. Not once did anyone mention the Capital Asset Allocation Model, or any other technical areas of investment expertise.
Over the past year, the US political scene has been shaken by the arrival of the so-called Tea Party, the populist, angry, anti-government movement. Meanwhile, however, in the financial sphere, another populist, individualist, anti-big-government movement of sorts is also now gathering pace: call it, if you like, the Gold Bug Band.
To be sure, gold devotees have always existed in America, just as a version of the Tea Party has always been around (that is, fiscally conservative, anti-government right-wingers). Indeed, before the 1960s, when the American dollar was employing the gold standard, it was widely assumed that gold was the best store of value available to mankind. Even after America left the gold standard in 1971, some investors continued to revere the yellow stuff. Alan Greenspan, the former Fed chairman, for example, wrote an essay in his youth, entitled “Gold and Economic Freedom”, which declared that “in the absence of a gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.”