LR European

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...