We recorded, at the end of last year, that Goldman Sachs’ chief economic strategist, Abby Joseph Cohen, was predicting an 18% gain for the Standard & Poor’s 500 in 2002. We trust that the knowledge that it actually finished 23% lower (at 879.82, down from 1,148.08 at the end of 2001) will prove useful to our readers.
This is not to single out Mrs. Cohen, who has in fact been far more sensible than most people in her line of work, and who did realize, back in March 2000, that the bull market was overvalued. Rather, it illustrates how predictions, especially optimistic ones that centre on the stock market, should be received with skepticism.
It’s not hard to find people ready to insist that the market is on its way back up again, on no stronger ground than the knowledge that the markets have never endured four losing years in a row. The problem with that view is that last year, it hadn’t endured a three-year bear run in six decades, and plenty of pundits were sure it wouldn’t happen again.
The flip side is that economic doomsayers are back in the limelight again, and one of their enthusiasms is gold. Over-optimism about the gold price is never good for the mineral industry. We welcome the past year’s increase, which has breathed some life into a business that badly needed reviving. Also, we can see many fundamentals that point upward, not least a weakening United States dollar. But it’s no time for triumphalism.
Whatever opportunities may be coming gold’s way, it makes sense to be conservative with one’s price forecasts. A couple of months ago we carried a flashback item on our editorial page from 1982, noting that two well-known technical analysts had predicted gold would rise to US$4,000 per oz. That was when gold was in the low US$400 range and it’s hard to imagine the daring behind a prediction like that. A 900% increase in any commodity price is just a little bit improbable.
At any rate, it was wildly wrong: gold has never been higher than US$509.75 since the prediction was made.
Mind you, science writer Gene Emery has a collection of predictions that would make your aura spin, including Bill Cosby’s new career as a born-again preacher (a prediction from 1998), Patrick Stewart’s discovery of a herbal cure for baldness (1996), and Charles Manson’s sex-change operation (1994). Next to those, US$4,000 per oz. for gold doesn’t look quite as strange.
But we’d prefer to be a little more conservative.
“He was not merely a chip of the old block, but the old block itself.”
— Edmund Burke, on William Pitt the Younger.
Mainstream media are only now towelling off the foam of excitement that formed on them when the Clonaid people announced the birth of a cloned child to an American parent — named Eve, no less.
The fertility franchise is an outgrowth of the Raelians, a half-religion-and-all-sci-fi sect headed by former journalist Claude Vorilhon, which believes life on Earth “is a deliberate creation, using DNA, by a scientifically advanced [extraterrestrial] people who made human beings literally in their image.” (Blackflies, wombats and Kentucky coffee trees, we presume, were all just worked up on a biochemical drawing board during a long, long spaceflight.) And Clonaid has since announced that a second cloned child has been born, this one to a lesbian couple in the Netherlands (we heard that report while driving through the Holland Marsh, and couldn’t stop giggling).
There was supposed to be third-party verification of the truth of the company’s claim, provided by physicist and former American Broadcasting Corporation science reporter Michael Guillen, whose credulity about such hoaxes as cold fusion, telekinesis and astrology is already well-documented. Alas, baby Eve’s parents, fearing an action brought by a very earthly Florida lawyer (well, who doesn’t?) have decided not to go through with genetic testing. But Clonaid and the Raelian organization have had a tankerload of free ink.
Anyone that has followed certain threads of the junior mining business will be thoroughly familiar with this script. It starts with a scientifically shaky assertion of mineral wealth in an improbable location; follows up with verification by a tame “expert” chosen by the property owner, which fools any number of people; and finally rings down the curtain with a failure to produce the goods. Ah, there is such magic in the theatre. Well, they make money disappear, anyway.
We’ve been watching the news wires (especially the American ones) closely. With gold over US$350 per ounce, some of the mining industry’s Clonaids are on the move again. Evidently they think the marks are ready and credulous. Will you be one?
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