G Cole <But until then, extreme caution is warranted. >
George; extreme caution is ALLWAYS warranted (VBG).
But; the prior Gold Bulls never had this derivative position; nor was there the complex intervention in the global currency, commodity & equity markets - all interwoven as part of the ESF's "stabilization" of the US market & economy which envolved depressing Gold as a cornerstone of it's inflation doesn't exist policy.
The derivatives change everything and these ARE a "new" phenomena - at these levels. Nothing has ever approached these "short" levels in Gold before - never even close... and "that" is different.
Gold stocks and the POG has not been allowed to "act" - they've been orchestrated. The physical gold market is miniscule as compared to the derivative market in gold George - the tail is wagging the dog at will here - ie:
mips1.net
<<The value of annual gold derivatives trading is twice as much as the total amount of gold that has ever been mined, and this figure is based on a conservative estimate of the size of the derivatives market. But only about 5,000 tonnes, or 4% of the total amount of physical gold, changes hands every year. It is obvious that the physical gold market is absolutely dwarfed by the size of the derivatives market for gold. It is logical and inevitable that the derivatives market, not the physical market, determines the price of gold.>>
Also; ask yourself if Gold no longer mattered; why are JP Morgan , Chase, Deutsche et al - in that unfathomable derivative position from Sept 1999 ? Why was it so important to supress Gold - if it no longer matters , if it is not currency ?
We have as much risk & excess in this market as any time in recent history; in addition to the complex interventions & manipulations which must be unwound on a when, not if basis... gold; now more than ever...matters and due to the above; there is no way it's going to "act" the way it did in prior Gold Bulls imo.
The question is this simple: if not here - when ?
1- Gold shares are in many cases at alltime - yes; alltime lows in shareprice and in core valuation multiples based on $'s paid per oz of production and reserves.
2- alltime short position via the derivatives
3- alltime high US Equity valuation multiples
4-$30 Oil shock
5-Unsustainable simultaneous account deficit & King Dollar
6- stress fractures in numerous global economies & currencies as a result of the too strong US Dollar
7-Mid East & now US Presidential Election turmoil, stress & risk
George... now if someone told you two years ago; that you could buy Gold stocks at alltime lows - with a record short position; with Mid East tension rampant, with $30 Crude Oil, with a US Presidential Election in turmoil, with the US Dollar at unsustainable highs - with this accout deficit and a US Equity Market at Still Record valuation multiples, but in the crash mode..... what would you have said ? |
