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Gold: The Only Remaining Bubble?

Inflation wise it appears that Gold is a leading indicator of inflation to come, not a lagging indicator, so that what the price of Gold may indicate is that there is an increasing expectation for inflation to get out of control in the future. The safe heaven theory is what creates bubbles in the Gold Market. The safe heaven interpretation, in my view, is that real money, goes to hard, liquid, assets temporarily while there is no safe investments out there to put your money in. Now when it comes to use it as a store of value and a hedge against loss of purchasing power then the market is real, it's not a bubble, Gold has been repriced long term and the USD 250 - USD 550 range is a thing of the past. USD 550 - USD 1.000 is the new trading band at may take 2 attempts (on a quartely basis) to break USD 1.030 in order to reprice it once again between USD 1.000 - USD 2.000 on a long term perspective. it's my personal view on it.

The End of Gold, Part Three

Patience is the only valuable virtue of every investor, I dump my Gold this morning at the European open and see what happened. Needless to say what USD 930 / 920 means now, a terrific suport for the subsequent run up to my former USD 1.200 limit price. Well that't how it works.

The End of Gold

The play with Gold still has a significant speculative component, personally I don't think that being extremely bullish nor being extremely bearish, short term, would actually pay off as investment, the proper setup is to be adaptative withint the almost 1 year long consolidation range. Now if I was to adopt a bullish instance, I would play it with the changes in the EUR/USD, the undeniable relationship between these two assets favors Gold for 2009, but people will tend to make the same mistake over and over again short term, which is buying the break of 900 only to see it come down to the 700/800 area. Exercise patient, do not rush into buying or selling in distress markets, wait for Feb 15 to see what the range was for the first 1 1/2 months of 2009 and then buy. The time to be extremely bearish has passed and a tiny bullish attitude may be coming. GOLD/(EUR/USD) ratio stands at 697 which is the highest since Gold was at USD 1.000, and suggests there is a preference for Gold, but it does not mean, in no way, that Gold will skyrocket in a month. From the demand/supply standpoint, production cost is coming down which makes B/E for producers lower and Governments are in no hurry to fill their safes with Gold, not quite yet. There is a lot more going on the Stock Markets, Bonds, Safe Havens and so forth and it is what Governments want the Gold Price to be. Also remember that Gold left a lot of traders (not investors) wondering last year why Gold did not work in their benefit, quite simple August was the time to be bearish and I said it back in August, and everyone was buying at the high 800 level following analysts recommendations, what a shame, those losing plays are not coming back to the market right now, they will eventually if they did not lose all their cash, meantime trust yourself, your market sentiment if it's proven right within the last 6 months and follow the short tem trend whether it is up or down, if Gold was to go higher, well a consistent break over USD 1.000 with a depreciating USD will make the trick. Disclosure: I don't have any market position in Gold at the moment nor do I own physical Gold.