Professor Niall Ferguson Says Don't Buy Gold, Wrong Again?

By: Adrian_Ash

Phew! That was a close call from our tenured contrarian indicator...

YIKES! FOR ONE awful moment just then, I thought maybe the top was in.

"Gold has become the favored hedge against financial and monetary uncertainty," said Niall Ferguson, Harvard's financial history professor, on Monday.

"It's certainly a time-tested way of coping with really turbulent markets."

Oh cripes! Niall Ferguson – our tenured contrarian indicator – now says gold is a proven defense against investment stress. It's taken 11 years and 356% gains in gold, but he's finally got it.

That's the top. Sell!

Oh, hold on – "A lot of the upside is already there," Ferguson went on, live by video-link to the Wall Street Journal. "The time to buy was in 1999, not 2010..."

Phew! As you were, then, bloody-minded gold buyers. And as you relax, safe in the knowledge that Professor Wrong still says you shouldn't buy, let's remind ourselves just what it was he advised 11 years ago – back in 1999 – the "time to buy gold" as he now puts it...

"The twilight of gold appear[s] to have arrived. True, total blackout is still some way off...Gold has a future, of course.

"But mainly as jewelry."

Fast forward to late 2008 – some $445 higher per ounce for gold, slap-bang amid the post-Lehmans Crash crisis – and Professor Ferguson was at it again.

"I have been debating today whether gold bars really are the answer," Ferguson confessed to the New York Magazine when quizzed about his portfolio for a puff piece that November.

But "they probably aren't," he decided...thereby leaving another $470 per ounce on the table over the last 18 months.

Now he says 2010 is not the time to buy gold either. So, given what happened when he rejected the idea in mid-1999 and then in late 2008, expect another $400-or-so on the price before the Laurence A.Tisch Professor of History next weighs in with his forecast.

The man whose last TV-and-book blockbuster, The Ascent of Money, concluded that "the state-owned bank [was] now close to extinction"...just as the UK nationalized one-third of its finance sector, and the US Fed bought $2 trillion of failing bank assets...now advises that "There are other ways to protect yourself, and maybe somewhat smarter ways."

Missing the point entirely once more, Ferguson recommends – instead of gold – buying Norwegian and Swiss government debt for protection from the sovereign debt crisis.

Clang! Clang! Everybody out!

By Adrian Ash
BullionVault.com

Gold price chart, no delay | Free Report: 5 Myths of the Gold Market
Formerly City correspondent for The Daily Reckoning in London and a regular contributor to MoneyWeek magazine, Adrian Ash is the editor of Gold News and head of research at www.BullionVault.com , giving you direct access to investment gold, vaulted in Zurich , on $3 spreads and 0.8% dealing fees.

(c) BullionVault 2010

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