Monday, July 1, 2013
What's up with Gold?
Whether or not you believe the markets are manipulated, you can still ask: Where are the buyers of gold?
What's going on?
Europe is coming apart at the seems. Japan is dying. China is not yet viable. And the US is growing at under 2 percent - and only - if you accept the notion there's absolutely no inflation. (Otherwise an accurate GDP deflator would have us in recession)
And there's your answer.
The US is losing the ugly contest. It doesn't make us beautiful, but compared to the other trolls and ogres competing, we're definitely the pick of the sad, sick, ugly litter.
Therefor there's a tremendous capital inflow into our barely breathing economy. So the dollar is strong as people are buying dollars to invest in US Industry via the Stock Markets.
And as long as competing paper currencies are turning into dollars to invest in US Equities gold will remain under pressure.
Then you get the spin machine. Right, Left, it doesn't matter they all buy the fact the housing is rebounding (then why is lumber and copper crashing?) and the Consumer is strong (With declining incomes and massive unemployment) and the Political System is healthy!
All this hype helps the US dollar and hurts gold.
But really, if gold bases here, let's say between 1000 dollars and 1400 dollars, everyone will say gold has cracked, it's in a permanent bear market, the luster is off bla bla bla.
But it's current base is still 4-5 times higher than the last base ten years ago. Is that really so horrible?
It will languish here until the US dollar is so strong, and the US markets are so inflated, the US tips into a depression that can't be statistically discounted, that can't be pumped up with QE Infiniti, and that will be brutal enough that everyone will realize it's here no matter what the spin.
Then the last reserve paper currency, the dollar, will seriously deflate and gold will move back off it's base of 1000 -14000 and move another 4-5 times higher.
Is that so horrible?