On a simple level, and perhaps most obviously, it could well be that I am not long. And while academics, psychologists, and behavioural economists have not fully-tackled the biochemistry of watching a feeding frenzy from outside the pack, there is much scope for further examination here in respect of emotional reactions. That said, I have happily survived twenty years where in my universe of tens of thousands of equities, there are always many that are galloping upwards outright, or relatively outperforming in a significant manner, and which I am not long, yet, I couldn't give a toss. My emotional sine-wave measuring visceral my reaction remains flat-lined Nor am I otherwise irritably-moved by a boiling coffee futures price, a bubbling cocoa time-series of spot prices, or any other commodity for that matter - none of which causes my stomach to turn.
Perhaps it is the messianic overconfidence that Gold's flock exude - approaching if not surpassing that of a missionary's zeal, not content to understand alleged The Truth within, but driven by a seemingly possessed enthusiastic (surely insecure?!? -ed.) exuberance that seemingly demands a validation of their views by attempting to convert the non-believers. Here, too, I will readily admit to being irked by the hyperbole and their spewers, but not in response to the zeal itself, but for my fear for them as an introspective frequent self-assessor. But neither Hare Krishna's, Jehovah's Witnesses, nor fire-breathing Born-Again-And-Again Fifth Pentecostal of the Latter Day Adventist Saints cause any visceral reaction in me whatsoever, despite the potential stakes being much much much higher (arguably the highest, though perhaps not on a probability-adjusted basis). I actually enjoy the Sunday-morning house-calls from the divinely-inspired pamphleteering sorts, be they Mormons or Seventh-Day Adventists or devotees of the Flying Spaghetti Monster, and am most polite when highlighting logical paradoxes, even going so far as to offer tea and biscuits.
It could also be that I fear they are, in the asset-allocation game, singularly, and single-mindedly, right. But I really don't think this is the case, since in the world of "assets" - be they scarce or otherwise, as I have written before, there are plenty of other assets, fine substitutes and alternatives for whatever cards are dealt - many of which will prove to be superior investments under weather both fair and foul across multiple time-frames. Moreover, judging by those ululating its virtues the loudest, they (at least if judged by the average blog comment deposited around the blogosphere) are unlikely en-masse to be "the winners" in the next chapter of capitalism's evolution. I will admit stranger things have happened, but it's just not highly probable that the contrarians win much further when their view reflected in prices is no longer contrarian.
Rather, I think that in my search for meaning, the rallying Gold price signifies more monumental failures at multiple levels for society, in politics, for nations, for our individual and collective ability to measure our wants and desires with our means. So despite my skeptical exoskeleton about most things (financial innovation perhaps first and foremost), the aforementioned bothers me intensely, for I am, at heart, both an idealist, and a closet optimist about humanity, foolish as it may be, and perhaps as paradoxical as Cliff Asnsses' views on Healthcare. Sustained Gold rally lances this optimism, helps lay bare the falsity of the veneer of prosperity and the fragility of its lattice during these last two-and-a-half decades, revealing the financial pus inside. This is after-the-fact, market reactive stuff and comes as no surprise to a skeptic, but one must push this view from the minds eye to function day-to-day without self-inflicting wounds. And what be goldbugs culpability? They resemble anarchists: strongly motivated to be on the vanguard for a variety reasons, but ultimately selfish and probably mistaken for apocalyptic systemic implosion remains a tail event. In this view , gold remains "a trade", and not an end to itself. More irksome, a bet on Gold may be "right", but it - betting as it does upon the acceleration of pus manufacture, feels (to me) somehow uncivic-minded - a wasteful employment of intellectual energy that might be set upon making what is systemically and socially un-well, better. I do not hate them for this, but am, merely saddened that the sum of prior decisions taken (and not taken) have brought us here.
Logic would dictate that I too should be dispassionate, for the set-up and speculative break-out percolating has been clear and obvious as risk spreads have shrunk, John Paulson has bought a zillion ounces and introduced a Gold-denominated share class. And for whatever reason, the rear-window feedback loop effect is stronger in Gold than other investments making continued follow-through more likely. But my feelings are not logical, and in any event it's rally belies the still-elevated likelihood that we will wallow in a recessionary mire for some time which if not deflationary, shan't be inflationary; that the public sectors' apparent bloat is - contrary to the fear - not under the present circumstance, inflationary, hardly compensating for the the [continued] shriveling in the private sector, nor will it do much to multiply money or ignite velocity so long as the era of private stupid loans is well-and-truly passed. So when I see Gold rally, my visceral reaction is the result of my incredulous beliefs confronting contrary evidence, and the mourning for said failures (both real and imagined) that it represents. And I find it difficult to go out and play when mourning.
(* headline photo is from a set of Finbar O'Reilly's in Reuters, via Telegraph Blog)