Gold held its new ground very well.
After the initial jump it just zigzagged in the high 280s - low 290s, while Oil, in contrast, fell all the way back, and then some.
The orchestrated global rates cut is very good for Gold, sharply reducing the spread between Gold and currencies and tilting the risk / reward balance for LT gold shorts.
Still there is lots of disbelief in the new bull for Gold, (which is good) apparent in mining stocks, that gave back a lot of their gains while the metal itself remained quite steady.
Still the uptrend is intact as long as higher lows are produced and as hard as I try, I cannot find a good bearish argument for Gold. The only thing bad I can think of is increase in CB sales, but that could boomerang if the market absorbs the supply increase without a plunge (which I strongly believe it will).
I couldn't resist taking profit on my NEM position last Thursday and hurried back in on Monday almost $3 lower.
Still holding my Dec Gold although regretting I didn't do the same there, too. It did look like the corrective move down has a second leg there but I was too preoccupied with other stuff to examine it more closely.
But what a surprise <g> Gold has not followed through to the downside today, and it closed near the day's high.
Looks like the ST correction did its part and support is building up for the next move up.
Earlier this week I talked to a client that months ago I advised him to take a defensive stance against the Dollar (currencies diversification and a little Gold by way of futures), which of course he didn't (ok he put 10% in Euros, a small step for a man, a giant leap for mankind). Now he said Gold was already up so what's the upside. That got me going and I said ok look on the downside, what, 8-10% ? And look on the upside much more then that, and now consider not a worst case scenario for the world (Religious WWIII), but a bad one (stagflation? currencies instability?) and you get hundreds percent upside, because all the Gold ever mined is worth only a little over half a trillion Dollars at current prices, which is peanuts compared to major currencies, and if the big boys will start thinking about diversifying into Gold there's no way for the current market to accommodate the sums involved without at least doubling. Simple math. He wasn't convinced, but I was.
Any solid miner you can recommend, with little or no hedge, preferably a large company and with operations away from world tension areas? NEM is lonely in my portfolio and looking for friends.
ATG |
