LR European

Gold Bears Stop Sector from Overheating

Well presented and thorough. Thank you. Perhaps my only quibble comes towards the end of your article when you ask the question:

"How long will it take the 1.3 billion gold-starved consumers of China to buy their fill? Perhaps the better way to phrase the question is: how many thousands of tons of gold will it take to satisfy this bloc representing more than 20% of our entire population?"

As I am sure you are aware, the vast majority of that 1.3 billion struggle to afford basic sustenance and have little hope of feeding their gold hunger.

Nevertheless, within that massive group is a tiny percentage of many tens of millions of Chinese who can and do afford to invest and are certainly helping on the demand side of the equation. So your argument was right, but the quantum was just a wee bit over-exuberant. ;-)

Gold Closing In on 20% Above 200-Day Moving Average

Its not different this time. That's the point. Gold has always been a refuge at times of uncertainty. Deflation is as much a driver as inflation.

I think you are almost certain to be proved right in your doubt, but no time soon and not until the price is substantially higher. There is no mania visible. The article makes the case quite convincingly that inflows into gold have slowed not accelerated. That is not the sort pattern seen at bubble peaks.


On Nov 18 04:04 PM woollyB wrote:

> Gold looks like tech in 1999 and real estate in 2005. Nobody thinks
> it can go down. If you think gold can only go up from here, its
> all-time high, you should explain why "this time is different." And
> if the explanation has to do with inflation, the Fed, etc., well,
> there are always compelling arguments at the top. That's why it's
> a top.

Gold as a Hedge, Not an Investment

There is a simple fact that the article misses: the performance of gold is correlated to instability. Not to inflation or to deflation. except in so far as those accompany economic instability.

In this context, yes, gold can be a trade against all the world's currencies. In fact, it often has been throughout history.


On Nov 16 11:03 AM Brian McMorris wrote:

> You hit on a key point that others somehow miss: The US Dollar is
> the world's reserve currency. This means that one way or the other,
> almost every other currency is indexed to the dollar (China's link
> is direct). So, when the dollar goes down, all currencies go down,
> more or less depending on the degree of linkage.
>
> Gold as a trade against all the world's currencies makes no sense.
> Gold might trade higher in a relative sense, one currency against
> another (as Oil does), but as an alternative to paper currency?
> I don't think so. Global fiat currency is based on the aggregate
> asset base of the world. There is not enough, nor enough interest
> in gold as a representative of the global asset base for it to serve
> as currency (and really no need). It is a speculative play only,
> and therefore is as likely to go down as up, especially once supplies
> begin to increase.

Gold: Who's Left to Buy?

Who's left to buy? You give the answer yourself when you say that 'every trader category is getting shorter'. Sooner or later investor allocations to gold will increase/ broaden and sooner or later there will be a short squeeze in gold as 'every trader category' scrambles to buy. Here's hoping! :-)

Gold: What Professional Futures Traders Think

While true that the main driver for gold at the moment is the US$, the price is currently rising in most currencies. A quick scan through the charts shows that although not hitting new short-term highs (yet?) in many of the stronger currencies gold's trend of more than a few months looks consistent in every mainstream currency.

Precious Metals: Breakout, Fakeout or Shakeout?

A beautifully argued article. Thank you. However, I think you are wrong on a number of counts.

1)You suggest that gold has not performed in a year of financial crisis. There are few assets close to their all time highs apart from gold, so....

2)You suggest that everyone who could possibly want to be in the trade has been brought in to gold. Actually the allocation to gold among the big funds (pensions, general mutuals etc.) remains close to zero and the same applies to the major wealth managers. Gold remains a minority interest among private investors, albeit with a widening circle, but we have not begun to travel the slope of broad acceptance.

3)You suggest that a shake out is needed before gold can take off. Possibly, but I think you overstate this. Gold's consolidation over the past year has been one of the lengthiest in the current bull market and sellers have been thinned out already. We may well see what lies behind door #3, but I suspect it will be a small room that no one wants to remain in for long...

Has Gold Finally Broken Out?

...or, more frequently, "investing".


On Sep 04 10:45 AM Graham and Dodd Investor wrote:

> People want to buy gold, but not "sell" it by giving it away as a
> present. This is called hoarding.

Gold Remains Rangebound

It would be worth checking (eventually!), but my impression is that the PMs have been making something of a habit over the last several years out of giving a dull mid section of the year before settling in to a trend in September which lasts through the end of the year...

My expectation is for strength and I am positioned accordingly. Unpleasant though the current churning activity is, it provides the resilience underneath the coming trend by shaking out nervous/ weak holders who will more than likely be back to buy at higher levels once trends are in motion.

Gold and Silver Facing Resistance Levels

"Disclosure: No positions" Why on earth?

Will India's Changes Bring Headwinds for Gold?

"the success of this venture would, I think have an effect on the price of gold, even from a purely psychological standpoint."

I wonder if you think the effect would be positive or negative on the price of gold.

Some of the arguments in your article seem to suggest that this development will provide an exit route which Indians will leap on and presumably depress the price by flooding the market.

On the other hand, improving the liquidity of an asset almost invariably increases its appeal. If Indians discover that their investments in a store of wealth are now more readily converted to cash than before, surely they are vindicated?

The problem would come only when India faced a time of hardship leading to forced sales, but it is a myth to suggest that Indians have only ever been buying gold, so what changes there?

Sounds to me like the positive effects overwhelm the negative.

Strange Action in Gold ETF Chart

ETFs are used by both speculators and investors. A fund allocating a higher weighting to gold because of uncertainties in fixed interest and equity markets would be there as a long-term investor. A speculator might be there for the short term and the inflow described as 'hot money'.

It is not right to combine these two very different investor groups as 'hot money'.

FWIW I believe we are consolidating recent gains in the middle or early stages of gold's bull run. We have yet to see the type of acceleration in prices that would denote a dominant element of speculative, 'hot', money. I think that will come before long....

Make It or Break It Week for Gold

$931 by Friday seems extremely specific in terms of both price and time. Not sure why. No doubt, as you explain, the level is important for some, but I think this market is broadening now. Many couldn't give a monkey's what the price is this Friday, providing the uptrend is intact and key support levels are not broken.

Gold and Silver Bells Are Ringing

Not keen to get involved in this, but am motivated to comment once more by the sad and destructive attitude that is being displayed.

Until not so long ago the dominant influence in financial market relationships was the concept of caveat emptor - buyer beware. Although in the current environment of compliance and regulation this might seem a dangerous world, what this meant in practice was that advisors who did not act with integrity held brief tenure and were quickly displaced: a free market at its best. Today, with the box ticking compliance culture deception and fraud is just as easy to perpetrate but it is usually more covert. The main casualty is excellence and the impulse from advisers to actually protect and help their clients/ readers (to win trust and benefit from loyalty and business).

It seems to me that the less rule-bound forum of internet advice offers the hope of a return to the sort of excellence and flair of the old caveat emptor culture. People will only follow advice from an unknown contributor if they display consistency and flair.

So, what do we have here? It seems to me that the advice provided by Gold Guru on NTO would have provided any reader with a modicum of independence of thought with sufficient evidence to buy the stock even in the absence of a full on buy recommendation. It is therefore understandable (and forgivable) that performance statistics were included as evidence of the quality of information being analysed. It is equally understandable that you point out that this is not strictly correct and suggest that the data is excluded. The prompt modification of the stats by gold guru and clear explanation of what happened is commendable - but you seem unwilling to let this go.

In a compliance driven market, gold guru would be fined or face some other regulatory control. In an internet / caveat emptor market, gold guru recognises that persistent misrepresentation will put an end to his enterprise because the trust and loyalty of readers will be undermined. In the first case there is no forgiveness, only punishment. In the second we have the potential for redemption through self-correction, with the alternative of total destruction.

Gold Guru has acknowledged the potential problem, corrected the web site and therefore renewed the unspoken contract with his followers. Obviously if there was a pattern of deception it would be a different matter, but for now this is a mistake which we can move on from without seeking punishment. For God's sake let's not impose the mediocrity that now afflicts institutional analysis on the free-market internet model. Let's continue to be wary of course, but not get tied up in knots every time there is an understanable human mistake.

Over and out! ;-)

Gold and Silver Bells Are Ringing

Excuse me for butting in on this playground exchange. Initially interesting and amusing, I have to say that by the end anon has become outright boring. Your comments have been answered and addressed with patience, the web site performance page updated and yet.... what's wrong with you?!

I have never looked at gold guru's website before, but intend to do so regularly in future as this is someone capable of retaining perspective in the face of a true neurotic. Weekend advice was spot on. Hope the stock advice will be as sensible.