Last month, I wrote a smallish feature for the Globe and Mail, entitled "The Case Against Gold" - essentially outlining why gold prices were stretched given the unattractive supply-and-demand fundamentals. That it would rile gold enthusiasts was obvious, which is why I'm not terribly surprised that John Embry, chief investment strategist at Sprott Asset Management, has now published a rebuttal.
Well, perhaps "rebuttal" isn't the best word to use because the piece - which appears in the January 28 edition of Investor's Digest - relies more on personal attacks than persuasiveness. He refers to me as "some gold neophyte" and calls my article "egregiously awful."
He goes on: "[It]had to rank with the worst and most misleading articles that I have ever had the misfortune to read on gold." And: "I find it beyond disappointing that a paper which is regarded by many as Canada's finest would sink to publishing such rubbish."
However, when it comes to telling me where I went astray or persuading investors that they should be buying gold at a record high of $1400 an ounce (which is roughly where it traded when I wrote the article; it has since fallen), Mr. Embry relies on the same arguments that have been used countless times before.
These arguments - interest rates are low, countries are in debt, the Federal Reserve is printing money, paper money is useless - might help explain why gold has surged more than five-fold from its lows, but they don't tell us why gold is a low-risk bargain right now.
At the same time, he trots out the old line from financier J.P. Morgan - "Gold is money" - even though it was uttered nearly 100 years ago during the days of the gold standard.
I expected better from someone like Mr. Embry. One can argue for or against any number of stocks, and what you'll usually get is a reasoned and healthy argument. But not with gold. For some reason, gold gets people emotional - and emotions and investing can be a toxic combination.