The September gold rush

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: The desire of gold is not for gold. It is for the means of freedom and benefit.” Ralph Waldo Emerson, a 17th century American writer’s summary on why gold is so sought after.And, in 2008 the world saw, gold as an asset, break all its previous records. Uncertainty and fool-hardiness leading to the overall economic turmoil no doubt led to many people going back to this one valuable asset that has survived and seen it all. “Gold I understand, complicated financial products, not so much,” remarks an insurance company’s CIO.

Enter 2009, a rough beginning of the year for most companies, industries and economies. Then the storm seems to pass us by, we feel the worst is over and all the signs point in that direction. Then the equity markets make a fantastic comeback, people want to invest again, banks want to lend again, companies want to expand again and the light in the horizon seems to be real now, no longer an oasis.

Yet, the speculations, pessimism and foreboding of things not being fully normal are high. Not surprising, since we all know what they say about the half glass of water.

However, this time round investor prudence in many cases seem to be a lot higher than say 2007 for instance. Investors have started to book profits, prefer portfolio approaches to investing and are interested in global cues from around the world and knowing how it will affect them.

September 2009, after gold had been range-bound for the last six months, saw international price crosses the $1,000-mark again. The reasons cited have been many – relating to economics, psychology, mathematical and of course, currency.

However, does this thousand dollar crossing mean something more? Or, is it a short-term phenomena rather than a longer term trend? And given this, what is the best way to balance or re-balance your portfolio in regard to gold, is the critical question.

Come September

September has been the best time to buy gold in terms of its month-on-month price appreciation over the past four decades, writes Frank Holmes, CEO and chief investment officer at US Global Investors, in Bill Bonner's Daily Reckoning, an investment advisory magazine.

Statistical data from 1969 till today do not show otherwise, and so this time round ironically, gold comes into the limelight at a time it’s always been sought.