Paradise Lost

Gold no longer a safe heaven – A major shift from precious metal to “Just a commodity”
keep converting your useless physical Gold inventory to different asset classes or just cash

“The mind is its own place, and in itself can make a heaven of hell, a hell of heaven.”
John Milton (Taken from his famous epic poem paradise lost)

Nature created human and human destroying nature, that’s a bitter truth we are all living with . We often see documentaries, news articles, presentations or activities/movements to save nature , or just to spread awareness.

You must be wondering, what this article is all about – Literature ? Nature ? or Gold ?

Let me make clear the air , its about Gold and its impact on financial markets , or rather – Financial Market’s impact on gold .

Reason to start with Nature is because I find great relevance between Gold and Nature.

Lets get back to Nature again

“Mount Everest” – highest peak of Himalaya , once unconquered and considered invincible. One gentleman from New Zealand , Sir Edmund Percival Hillary reached the peak for the first time and opened the gate of a new destruction. Post this expedition in 1953 ,  thousands of mountaineers visited Nepal , each year to win Mount Everest. Many expedition groups, consist hundreds of people, tried their hands in last 60 Yrs. It became a source of good revenue for Govt. of Nepal

Back in 1998 , after 45 Yrs. of Sir Hillary’s success , a private team calling itself the Everest Environmental Expedition removed 1.2 tons of waste from Everest, collected primarily around Base Camp. While plastic bottles and empty oxygen canisters are unsightly, batteries , spent fuel cylinders, and human waste actually pose a greater environmental risk. Other environmental expeditions continue the effort to clean up Everest.

After another 13 Yrs. , today in 2011 , it’s a tourist attraction. Chartered planes are available to fly around Mount Everest .You must have remembered  the tragic plane crash few days back , on 25 Sep 2011 , in Nepal ….. the plane was flying with tourists to view mount Everest.

Now the whole world including the Government authorities and some famous Nature Activist are fighting to reduce footprints to save this region from further damage. Around the world nature activists are warning about melting glaciers – human destroyed nature and that’s unstoppable.

Once “The Unconquered Peak of Mighty Himalaya” is now having problems with conquerors across the world trying to have a piece of glory tagged to their resume.

Lets get back to Gold now

In ancient history, this precious metal , which was far from the reach of common people, was found only in possession of Emperors . Then converted into currency, Gold Coins was used in many kingdoms as a higher denomination currency, across the world .

Just before a decade , gold prices were quite stable and was considered as a perfect hedge against inflation. Price was stable because it was driven by physical demand of gold and then arrived “Sir Hillary” of this world, Financial Institutions looking for a safe heaven during Economical crisis. Price of gold doubled and tripled, just in matter of few years.

Post 2008 economic crisis, Gold is seeing a major shift in its status, from precious metal to “just a commodity” Investors across the world started looking for trading opportunities in Gold.Gold financing companies, ETF’s, Gold centric Funds and commodity markets contributed to this transformation.

I heard an expert commenting on Gold – “A commodity with such a high volatility can not be a safe heaven anymore” , I agree

The kind of price fluctuations we have seen in recent past in gold erases all conventional thoughts about this precious metal in my mind and now I just see it as a commodity, one of the most traded, around the world.

Whenever Institutions will need to come out of safe heaven, to explore better opportunities, in slightly better than now financial health of the market, it’ll crash like Equity Market – Just a trigger required , then the trend will follow , big financial institutions , exiting Gold , one after another , to catch an early bite of cheap equity , seeing the financial conditions of western world improving (whenever it happens)

The biggest loser will be the physical holder of the Gold , because they never sell.

I’m ending it up with an advise which most people may find funny, but I am damn serious about my advise

All you physical holders of the Gold , keep converting your useless physical Gold inventory to different asset classes or just cash , as the Gold prices moves higher than normal levels , because the thing which was called “A Precious metal” will remain precious , but the crash is inevitable, because the paper holders will just treat it as a “commodity” and to counter the famous perception that “gold reserves are limited and prices can never fall” – remember , its not a commodity like crude , without which world can not move for a day.

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