Encouraging news that the gold bull market is far from over comes via this report at The Economist in which, despite the metal’s impressive performance over the last ten years and the recent eagerness of central banks around the world to buy the stuff after dismissing it as irrelevant for the last few decades, they still think the metal is a loser.

Savers have to put their money somewhere. But if they make the wrong choice the results could be disastrous for them. History is well stocked with bear markets that wiped out wealth on a vast scale. When British government bond yields were last down to 2.5% (their current level), in 1946, the subsequent 28 years saw them lose three-quarters of their value in real terms. Investors who piled into gold at the last peak in 1980 saw the price fall by two-thirds in the 20 years that followed.
…
Those worried about inflation and looking for a hedge may be more interested in real assets (property or commodities) than in paper ones. Until recently, gold has been a very strong performer; it has been easily the best asset to own since the start of the credit crisis in 2007 (see chart 2).

The problem with gold, and other commodities, is that with no yield or earnings they are hard to value. Demand from Asian countries has certainly pushed up prices; non-oil commodities have trebled over the past decade. But if the economy does start to slip into recession, commodity prices could fall very sharply; they almost halved between March and December 2008.

Ah, yes. But, gold was the notable exception, falling sharply in 2008, but rebounding to end the year as one of the few winners with a gain of about six percent.

Interestingly, the title of this article is “I wouldn’t start from here” which is ironic in many ways, not the least of which is that, for any new gold investors, it would surely be hard to start from here (at just under $1,700 an ounce), however, anyone who does will still probably come out ahead of just about any other investment approach in the years ahead.

Here’s JP Morgan’s chief commodity guru Colin Fenton explaining why the investment bank still sees a sharply higher gold price by the end of the year.

Clearly, there’s a little backpedaling going on here as Fenton cites the looming risk of recession as the reason for ratcheting down their price target from $2,500 an ounce to $2,100/$2,200 an ounce, still a hefty double-digit gain from current price levels.

On whether the metal is in a bubble, Fenton notes:

If we plot the gold price against entitlement spending in the U.S. federal budget it’s almost a one for one correspondence … Fundamentals are important because the unfunded liabilities Joe was talking about earlier is what is being priced in.

You can buy gold bars at hundreds of post offices in India, so, it shouldn’t come as too big of a surprise that you’ll soon be able to buy the metal at 2,000 ATMs in China, the nation now battling India for the top spot in global gold demand. Details are in this Mineweb story.

China has joined the United States, Germany, Italy and the United Arab Emirates, in hosting an ATM machine that dispenses bullion and gold coins. In Beijing’s 800-year old Wangfujing shopping district, shoppers can use bank cards and cash to buy certified gold bars and coins.

China’s first ATM dispensing gold bars and coins was switched on over the weekend of September 25, and then swiftly switched back off again. The equipment had to be shut down the same day because it was not producing receipts due to a small technical glitch, said an industry observer.

The German-imported gold vending machine was then officially installed during the Chinese National Day holidays, which fell in the first week of October.

Despite the initial hiccup, there are plans to roll out 2,000 more ATMs nationwide. The machines are operated by Beijing Agricultural Commercial Bank and a gold trading German firm. Plans call for installing more of them in secure locations and in private clubs at banks and at landmark buildings in large cities across the Asian country.

There’s more than a little bit of irony in a German company manufacturing and exporting gold vending machines to the rest of the world, China now being their biggest customer. You’d think that some Chinese company would have figured out how to it by now.

We’ve watched many of the Brad Meltzer Decoded shows on the History Channel and they’ve been fairly entertaining, if for no other reason than to watch Alex Jones canoeing down a river next to where the Bilderbergs were supposedly meeting (or something like that).

In fact, the one about the death of Meriwether Lewis of Lewis & Clark fame was excellent and contradicted much of what was in Stephen Ambrose’s Undaunted Courage. But, this show about the gold at Fort Knox just came off as being a little bit (some might say, very) hokey.

They ask some important questions and produce some interesting anecdotal accounts about whether there’s any gold there (such as a waitress who said her mother, while in the military and working at Fort Knox, told here there was none), but the collection of interview subjects kind of left me feeling like I should either put on my tin foil hat or change the channel.

Maybe if they had interviewed someone like Jim Grant of Grant’s Interest Rate Observer about the long term prospects of a fiat money system and the historical role of gold as money it would have come off as something other than just another conspiracy theory.

I was taken aback by the bullishness in the lead story on the Nightly Business Report last night as, apparently, the network hadn’t gotten the memo from central banks and economists that the barbarous relic was a barbarous relic once again, that is, after the price had tumbled almost $400 an ounce as of yesterday morning from its early-September high.

Watch the full episode. See more Nightly Business Report.

Admittedly, Joe Foster of Van Eck Global is just talking the firm’s book, but it seems odd to hear anyone say on network television in the U.S. that, with the gold price at $1,600 an ounce, you should be a buyer.