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Investing with Spandau Ballet

Julian Marr

Thank you for coming home, I’m sorry the chairs are all worn.”

A very happy New Year to you and I trust you enjoyed the Christmas break. It wasn’t the chairs that were all worn in the Marr household so much as one particular spot on the sofa as I looked to fill, with potentially lethal quantities of televised sport, the aching void left by not writing this column for a month.

One thing that surprised me – aside, of course, from England’s hitherto unknown ability to bat through a day – was the degree to which the usual daytime advertising fare of ambulance-chasers and loan sharks was supplanted by companies kindly but insistently offering to take all my unwanted gold off my hands.

Not really having any gold, unwanted or otherwise, to send to these philanthropists, my natural instinct was to set up my own charitable venture, Bung Us Your Gold You Mug. But then I thought again – and not just because I couldn’t see how to compete with whichever ad has the man in the cravat trying to be posh and who, incidentally, seems to have stolen Mark Dampier’s beard.

“After the rush has gone, I hope you find a little more time, remember we were partners in crime.”

Hmm – that slogan needs work, too. Now, I wouldn’t dream of suggesting the gold-buying firms and organisers of gold-buying parties had anything but people’s best interests at heart – just like the afore-mentioned ambulance; chasers and loan sharks – but when investment, if that’s the right word, becomes this populist, I start to worry.

It’s a little before my time, at least professionally speaking, but I believe we have been here before. Towards the end of the 1970s – an era unblessed by daytime advertising and insured freepost envelopes – Hatton Garden lay besieged as experts predicted gold could even push as high as $5,000 an ounce. In January 1980, the gold price peaked at $875 before eventually slipping back to the sort of level where only Gordon Brown could consider selling.

“Glad that you’re bound to return, that’s something I could have learned.”

Oops, bang goes another New Year’s resolution – it’s neither big nor clever to tease the Prime Minister these days and, really, what’s an $11bn slip-up between friends? Actually, I only recently discovered those Treasury gold auctions of 1999-2002 – at an average of $275 an ounce – was motivated by an appreciation of modern portfolio theory rather than rank stupidity. So that’s all right then.

Aside from looking pretty, gold doesn’t really have a use, which means – unlike other commodities – its price is driven not by supply and demand but by the sentiment of investors, sofa-bound or otherwise. Gold’s surge to, as I type, around $1,120 an ounce has thus stemmed from its reputation as a hedge against the inflation many market-watchers saw as an inevitable consequence of last year’s global stimulus packages.

“There’s nothing left to make me feel small, luck has left me standing so tall.”

Easy tiger – what if the US takes off this year and the Fed raises rates, pushing up the dollar? Or if the global economy moves in the other direction, once more raising the spectre of deflation? Gold wouldn’t look so clever then and, either way, the downside risks now seem to outweigh any potential upside.

I’ll leave the penultimate word to John Greenwood, group chief economist at Invesco Perpetual, who recently said: “I would be hesitant about making any further commitment to gold because although commodities tend to rally at the beginning of the business cycle upswing and, in general, do well while the dollar is weak, the fact is you don’t get any yield on your gold.

“Also, the underlying presumption is that gold is an insurance against catastrophe, and I don’t believe we are going to have that catastrophe. I think we will see a gradual recovery and people will be continually surprised by how low the inflation rate is. That will erode and undermine the gold price rather than support it.” Or, as that hitherto unsuspected investment guru Gary Kemp, put it: “Slowly being eaten away, just another play for today.”

Julian Marr is editorial director of


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