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This just in: Gold had its biggest rally in nearly two years last week, gaining 5.4% to $1,278...

This just in: Gold had its biggest rally in nearly two years last week, gaining 5.4% to $1,278 per ounce. The move came as large speculators raised bullish bets 4.1%, according to CFTC data. Bernanke's dovish comments were a nice excuse to buy, but about a 30% decline in price this year may have been a better one. "Gold may have gotten oversold and was due for a bounce, but a bounce doesn't a bull market make." says equity trader John Goldsmith. GLD is flat, but the metal is up another 0.5% today to $1,284.
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Comments (20)
  • Doug Eberhardt
    , contributor
    Comments (2994) | Send Message
     
    At least I'm thinking like a hedge fund manager when I called the bottom a couple weeks ago: http://bit.ly/14bkOpZ

     

    I am still dollar bullish though....for now.

     

    Hedge Funds Bought Gold in Biggest Rally Since 2011: Commodities
    By Joe Richter
    July 15 (Bloomberg) -- Hedge funds raised bets on higher
    gold prices for a second week as comments from Federal Reserve
    Chairman Ben S. Bernanke damped expectations for an imminent
    tapering of stimulus. Futures rose the most since 2011.
    Speculators increased their net-long position by 4.1
    percent to 35,691 futures and options, U.S. Commodity Futures
    Trading Commission data for July 9 show. Net holdings expanded
    even as speculators increased short bets to a record. Net-
    bullish wagers across 18 U.S.-traded commodities retreated 3.4
    percent as investors became the most bearish ever on corn. They
    were more bullish on silver and palladium.
    The U.S. needs “highly accommodative monetary policy for
    the foreseeable future,” Bernanke said July 10. Minutes from
    the Fed’s June policy meeting showed many officials wanted a
    stronger labor market before tapering bond purchases. Gold more
    than doubled from 2008 to a record $1,923.70 an ounce in
    September 2011 as the Fed cut interest rates to a record low and
    bought debt. Prices plunged into a bear market in April as some
    investors lost faith in the metal as a store of value.
    “Bernanke’s comments put some positive feeling back into
    gold and into all commodities,” said Dan Denbow, a fund manager
    at the $1 billion USAA Precious Metals & Minerals Fund in San
    Antonio. “The Fed has been working hard to show that taking
    back a little bit of bond buying isn’t removing accommodation,
    and Bernanke was very firm on that. There was a bit of a
    sentiment shift.”
    15 Jul 2013, 11:25 AM Reply Like
  • Jason Burack
    , contributor
    Comments (1760) | Send Message
     
    The COT & BPR are super bullish. The bullion banks are net long for the first time in many years.
    15 Jul 2013, 06:08 PM Reply Like
  • Be Here Now
    , contributor
    Comments (4370) | Send Message
     
    Gold had a much bigger rally in April - up 9% - but then sank like a stone in June. Why is this time any different?
    15 Jul 2013, 12:58 PM Reply Like
  • mobyss
    , contributor
    Comments (2042) | Send Message
     
    This time it's based on the general knowledge that the Fed will probably never be able to end their massive stimulus programs (in April this thought still existed), and hence the dollar is going to be on a long, steady path of devaluation for a long, long time.
    15 Jul 2013, 01:01 PM Reply Like
  • stopthe
    , contributor
    Comments (193) | Send Message
     
    Yes, but the valuation of the dollar in financial markets is unrelated to its purchasing power. Instead, it relates directly to confidence in the institutions that back it.

     

    That confidence is on the rise again, and so while the purchasing power of the dollar will continue to decline -- along with all other currencies -- the dollar will not only outperform the other currencies, but it will also outperform gold.

     

    If this were not true, then gold should have been a safer bet than the dollar since 1971, when the real devaluation began in earnest (Nixon Shock.) But that hasn't been the case.
    15 Jul 2013, 02:28 PM Reply Like
  • mobyss
    , contributor
    Comments (2042) | Send Message
     
    "If this were not true, then gold should have been a safer bet than the dollar since 1971, when the real devaluation began in earnest (Nixon Shock.) But that hasn't been the case."

     

    In 1971 a dollar bought 1/35 ounce of gold. Now it buys 1/1285 an ounce. Please explain how the dollar has been a better investment than gold since 1971. Thanks.
    15 Jul 2013, 04:24 PM Reply Like
  • Hendershott
    , contributor
    Comments (1583) | Send Message
     
    A steady path of devaluation....devalued versus what? Yen, Yuan, Euros, Rubles?
    15 Jul 2013, 09:29 PM Reply Like
  • delurkingjustforyou
    , contributor
    Comments (7) | Send Message
     
    Food, Shelter, Energy, Labour
    15 Jul 2013, 09:53 PM Reply Like
  • mobyss
    , contributor
    Comments (2042) | Send Message
     
    Oil, real estate, food, commodities. Pretty much everything real and needed by people to live.
    15 Jul 2013, 11:53 PM Reply Like
  • vonMisesfan
    , contributor
    Comments (100) | Send Message
     
    Sure, go ahead and put your money where your mouth is. Who knows, you may do a killing betting on the side of the Helicopter and his buddies at GS. Just remember to cover ahead of the huge shorting crowd.
    16 Jul 2013, 12:29 AM Reply Like
  • Hendershott
    , contributor
    Comments (1583) | Send Message
     
    Oil is ridiculously manipulated, real estate is coming out of a big hole, food inflation is flat and commodities got killed.
    16 Jul 2013, 07:51 PM Reply Like
  • Lares Capital
    , contributor
    Comments (427) | Send Message
     
    Goldsmith. What an ironic name for a gold trader :)
    15 Jul 2013, 01:14 PM Reply Like
  • normancanter
    , contributor
    Comments (2) | Send Message
     
    Not ironic....rather quite suitable. If you've got it, smith it.
    15 Jul 2013, 04:39 PM Reply Like
  • 13761362
    , contributor
    Comments (382) | Send Message
     
    not really. move along...
    15 Jul 2013, 02:06 PM Reply Like
  • stopthe
    , contributor
    Comments (193) | Send Message
     
    Gold will continue to bounce its way down, shaking out all of the manic buyers of the last 5 years, until it is back to 1990s prices in around 2017 when the next REAL bull starts in the stock market. (The current stock market rise is temporary and unsupported by economic data.)

     

    By all means, pick up some gold in the dips on the way down if you're a long term holder, i.e. a goldbug. Because to you, price doesn't matter and never will. The only thing that matters is how many ounces you have.

     

    What we have seen for the past few years is the same as what we saw in the late 70s and early 80s. We are currently on the downside of the slope. The smart people were buying gold at $300 in the 1990s and getting laughed at, when everyone else was pouring their life savings into the stock market -- and then losing most of it in the 2000 crash.

     

    If you're a "trader", better sell your gold now before we are back to triple digits.
    15 Jul 2013, 02:21 PM Reply Like
  • Jason Burack
    , contributor
    Comments (1760) | Send Message
     
    In the early 80s, Volcker raised real interest rates above the inflation rate, was willing to put the economy into a recession in order to defend the US Dollar. Is any of that happening? The US Dollar is strengthening not because of a strong dollar policy but because it is being propped up by our trade partners as other countries devalue their currencies faster than the US is currently devaluing and they voluntarily import the US' inflation. The exact opposite monetary policy from the Volcker Fed is happening now. US Fed and US Treasury is attempting to drastically weaken the US Dollar and they want negative real interest rates.
    15 Jul 2013, 03:23 PM Reply Like
  • Amber Li
    , contributor
    Comments (27) | Send Message
     
    Gold gained, while dollar shed, which were both due in large part to Bernanke's dovish comments. But any hawkish views will dampen risk appetites. Concerns still lingered since the Fed's stimulus tapering is on the way, although not sure the exact timetable yet.
    15 Jul 2013, 09:39 PM Reply Like
  • Jessica Sun
    , contributor
    Comments (17) | Send Message
     
    Yep. Markets are full of changes. People are awaiting Bernanke‘s remarks on July 17, which is projected to play a key role in deciding the movement of the gold price. DZH News
    15 Jul 2013, 11:24 PM Reply Like
  • Tactical Technician
    , contributor
    Comments (127) | Send Message
     
    Biggest rally in two years, indeed. Following two major dumps.
    15 Jul 2013, 10:49 PM Reply Like
  • lghdavid
    , contributor
    Comments (26) | Send Message
     
    Well said! Gold seems to hit the bottom before swinging to a rally. Look elsewhere of the globe and we may get a full pic. According to DZH News, investment in China's real estate sector increased 20.3 percent year-on-year during the first half (H1) of 2013, 0.2 percentage points greater than the nation’s total fixed-asset investment, fuelling unease about the sector's sizzling growth.
    15 Jul 2013, 11:03 PM Reply Like
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