Monday, December 5, 2011
Greek Gold: Bull Market of the Decade
The Winter Auction season for ancient gold: Greek, Roman, Byzantine is upon us. Go to Sixbid.com to see the lineup. As always the winter auctions bring out the finest, rarest, most sought after of Ancient Coins. Coins of spectacular beauty, rarity, and historical importance.
And as has been the case for the last ten years, this year's auctions will bring prices vastly higher than last year's auctions.
Now, you can use a host of metrics to judge the overall strength of the gold market. Many people love ratios, such as silver/gold, dow/gold, oil/gold, cot data, open interest, bullion banks vs speculators. All these have a place and can be useful, insofar as reversion to the mean analysis can be useful in the very short run.
But for my money, the Greek Gold Coin market serves as the best leading indicator for the Gold Bullion market. Why?
Because the same buyers who have been ahead of the curve all along by protecting their assets from the inevitable debasement and destruction of paper by buying bullion, have been protecting their assets in the same fashion by buying Greek Gold coins.
But why a leading indicator?
Because every reason to buy bullion, is valid but intensified in the Greek Gold Market.
1) Intrinsic value. Gold has always been money: Greek gold is the first money. But Greek gold also has intrinsic value as a store of History, and as a work of art. Much ancient history is only history because it is corroborated by Greek Gold coins. And the greatest artists of the classical era were invited to the couts of Tyrants to design the coinage.
2) Portability. A great deal of wealth can be stored in a small amount of bullion. Far more wealth can be stored in a high end greek gold coin. In fact some coins of about 8 grams of gold can be worth a million dollars.
3) Liquidity. The bullion market trades 24 hours a day in every financial center of the world: Europe, Asia, Middle East, Africa, the US. Geek gold is collected and dealt in every major financial center of the world. Europe, Asia, Middle East, the US. I don't know about Africa.
4) Rarity. All the gold ever minted can be stored inside a small swimming pool. But high end Greek gold coins of individual types can be counted on your fingers. And even the most common types number in the low hundreds.
5) Privacy. The governments of the world can try but it is very difficult for them to track and quantify personal private gold ownership. There is not yet a government official in the world tracking the Greek gold market.
For all these reasons, the fantastic market in Greek gold continues to be a fantastic leading indicator of the bullion market. And I can tell you the the Greek gold market has been and continues to be the world's greatest bull market.