A Financial Times editorial spelt it out last Tuesday: "Gold is the new global currency".
Today, Friday, as I write, gold is at $893 per ounce. New forces are driving up the price. Central Bank acquisitions of emerging countries among them. Gold does bear a relationship to other metals, especially copper.
In these circumstances, it is useful to examine the operations of merchant banker Evy Hambro. Serious investors are, however, reminded that a little knowledge is a dangerous thing especially if they play with serious money. Mining shares can be expected to rise significantly in 2008.
Evy Hambro, scion of the famous merchant banker family, spelled out his reasons for such an eventuality on Bloomberg with lucidity and an economy of analytical tools.
Hambros Bank managed the enormously profitable Malta Development Fund, which was the most successful investment vehicle ever set up in this country.
The agreement was sealed by a meeting between Lord Hambros and Prof. Joe Bannister. This was based on promotional activity set in motion by yours truly.
The Hambros name is one to conjure with. It has brought wealth to the rich and solace to the poor in this country.
The massive Conservatorio Bugeja complex in St Venera, the parish church of St Paul's Bay, and Casa Leone, all owe their beginnings to Marquis Bugeja, an entrepreneur nurtured by Hambros.
Financial motivation and trust for share trading must be underpinned by a cultural background. This is the reason for this Hambro introduction. Investors are warned that walking into a financial institution about which they know nothing is suicidal.
Evy Hambro has been presented by Bloomberg as a star moneyman. The past year has seen an unsatisfactory stock exchange performance in the world's greatest countries.
The only investors who have made massive monies have been those who cared to think globally, and to ride the fiery horse of metal mining.
It was apparent very early last year that BHP Billiton, a great mining company, with 40 per cent of the world's uranium, was bound to shoot forward in an oil-starved world planning new nuclear reactors.
Bloomberg reported on January 9: "Blackrock Inc.'s $15 billion World Mining Fund rose the most among Europe's 10 largest stock funds in the worst year for equity investors since 2003.
"The Blackrock fund, managed by Evy Hambro in London, rose 61 per cent last year as of December 27, compared with the average 3.3 per cent return of stock mutual funds sold in Europe. Fidelity International's European fund was second, up to 12 per cent.
"Jupiter Income Trust was the worst of the 10 largest fund managed in Europe, down by 4.9 per cent after manager Anthony Nutt sold mining shares."
Readers should draw their own conclusions on the Bloomberg statements on Evy Hambro. His basic forecast was that the share prices of metals depended on supply and demand. He was as down to earth as any 'O' level economics textbook. In the case of all metals, supply could be easily forecast, but not demand. This was because new mines take between three to four years to become operative.
There were no new great metal mining discoveries recently, so the mining companies directed the spending of their cash piles into acquiring other metal mining companies. This was the best scenario for a spike in metal share prices.
The coming low interest rates of 2008 are an added incentive for mergers and acquisition activity.
Investors must beware of the well-known low level of correlation between the mining sector and equity markets as a whole.
This is no playground for those who do not enjoy the research, and certainly not for widows and orphans.
This article is cultural, not advisory. John Azzopardi Vella has promoted the Malta Development Fund and advised S&P. He is currently economic consultant with DBR Investments Ltd.
E-mail: johnazzopardivella@hotmail.com