Tuesday, May 15, 2012
This is why you buy bullion
Gold is in a vicious swoon. Everything that should make gold soar is occurring: massive debt dislocation of of capital resources, coupled with massive printing of paper. Yet gold swoons.
To those who look at pure capitalist models (mapping financial worlds that only exist in the imagination) this is evidence that the gold bull is dead, and they sell their paper gold.
To those who bought gold at 1600-1900 they are bearing losses and they sell their paper gold.
To those who bought bullion this is a major pain in the butt, but it's way too much trouble to sell their bullion. So they're just sticking it out.
This - like all financial markets - is a coordinated, managed gold swoon, necessary as prelude to the next major coordinated money printing program.
When the inevitable printing becomes known (it is probably going on right now) gold will take off again.
Only those with the prescience - or luck - to hold bullion will still be on board.