Over the past year, through the crisis, the financial world should have understood that the peaks of the market are not always synonymous of a good investment; mostly of the time this “peaks” are exaggeration and do not reflect the right and real value on the market.
The articles that I took into consideration are all explaining the incredible rise of the gold over the past months therefore a simple question caught my attention: is gold peak another market bubble or is a justified raise in price of a commodity?
The first article analyzed is from the Financial Times: clear structure and sophisticated overview of the argument. As always FT have interviewed the best expert in the market to give the readers a depth understanding of the facts, analyst from HSBC and Barclays Capital. The first part is based on future forecast as “We believe gold has a significant upside potential into 2010…” while the last few paragraphs are characterized by an accurate explanation of the gold trend. The reader is no influenced by any comments of the journalist but surprise me the interview with Ashraf Laidi, chief market strategist at CMC Markets that seems justifying the gold record, focusing on historic data and therefore trying to reach the readers attention to communicate them: gold is still a good investment.
Bloomberg uses a more technical approach to the news. It is a complicated article made for specialist readers that already know the news and want to have specific details of the rise and technical overview of the matter such as “Gold for immediate delivery gained as much as 2.6 percent to a record $1,043.78 an ounce yesterday, and traded at $1,038.46 at 10:35 a.m. in Singapore”. The last paragraphs are based on assumption of the global head of technical analysis at Barclays Capital that is explaining that the gold rise is “by no means unstoppable, as none of the charts show prices concurrently pressing against their respective all-time highs,”. All the facts and figure are described with absolute objectivity basing all the comments and forecast on technical analysis.
From a completely different point of view is the piece of work of The Guardian that is focusing on the correlation between the raise of gold and the declining power of dollar “fresh speculation about the declining power of the dollar as the world's reserve currency sent the greenback sliding and gave the precious metal a boost”
The Guardian is using its typical approach of communicating the news, giving the reader a broad understanding in the easiest way as possible. It interviewed well-know analyst and instead of analyzing the datas (as FT and Bloomberg) is trying to forecast the phenomenon through the losing power of dollar "as long as we don't see a sustainable rally in the dollar, I don't think the rise will stop." From the reader side is a well-structured article but does not appear objective at all; it tries to transmit the euphoria of the new record without taking into consideration the possibility of negative aspects and implications.
At the end The Telegraph that in three paragraphs resumes the whole news with explanation, analysis and forecast gives a well-written flash of the gold news.
It is an easy reading article with good and sophisticated assumptions based in the inflation “The gold price is still significantly below its inflation-adjusted high. The price hit $850/oz in January 1980, which represents a price today of about $2,300/oz when adjusted for inflation”.A short article but with all the information needed to understand the news.
After having analyzed all four articles it comes to my attention that none of them have never mentioned a possible negative impact of the rising of gold or put on the readers attention that this peaks could be generate by the crisis. After a long period of depression financial media could finally write about good news coming from the market and seems to me that are trying to reassure the public with positive assumption and approach forgetting to speak about negative implications.
This way of transmitting the news could create confusion and misunderstanding between the readers and lead to have a too shiny point of view of the market that unfortunately on my opinion is not shining at all.
Financial Times:
http://www.ft.com/cms/s/0/04c1aa8a-b33a-11de-ac13-00144feab49a.html
Bloomberg:
http://www.bloomberg.com/apps/news?pid=20603037&sid=a0m8QhfjdEG4
The Guardian
http://www.guardian.co.uk/business/2009/oct/07/gold-prices-rise-dollar-decline
The Telegraph:
Well researched and a good introduction and opinion. Well done. 7/10
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