Gary, here's what some others think about the camel.
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From Richard Russell's newsletter:
Gold -- There is a massive short position against gold on the part of the Commercials. A short position has the affect of producing supply. In other words, the short-seller is selling stocks that he doesn't own (supply) and he will cover at a future date.
Subscribers are asking why the gold shares aren't surging with the price of gold (well, a few of them are). Gold and gold shares are two different animals. When the Chinese government or some wealthy Arab buys gold bullion, he doesn't give a damn about what Newmont or GoldCorp is doing. In other words, the buyer of gold is very different than the guy who is speculating on a gold stocks.
The buyer of gold or gold coins know what he's doing. He's taking a long-term, maybe a life-long position or hedge against the inflationary policies of the central banks. He's holding a percentage of his assets in real money.
The buyer of a gold shares is hoping that his stock goes up, and somewhere ahead he'll sell the stock, hopefully, at a profit.
I believe gold-stocks buyers are still very nervous about buying the stocks. The stocks are volatile, the stocks have backed off at a moment's notice. The stocks act like "nervous Nellies," running up a few points, then dropping a few. Furthermore, the public is not into buying gold shares. The fact is that gold shares are now in the accumulation phase, in the early phase of what I believe will be a huge bull market in gold.
Today is an interesting example of what I'm talking about. The Gold/Dollar Index ratio is up 3.50 to a new high as I write. Gold is up 1.70. The Dollar Index is making new lows. Yet the gold shares are ragged, some up and many down. Nervousness, distrust, fear -- the gold shares reflect the prevailing attitude toward the gold picture. I put it all down the early phase of the bull market. It takes guts to buy gold shares here. It takes a lot less guts to buy gold, the metal.
DeBeers tells us in ad after ad that "Diamond are forever." Well so is gold.
Analyst Rick Ackerman put the whole situation very succinctly when he stated that "We are heading into an economic typhoon for which there is no historical precedent: a world drowning in debt, but also awash in fundamentally valueless money."
John van Eck (founder of van Eck precious funds) notes that "The leveraging of the US since World War II has led to a record high business and household debt of $15.3 trillion (144% of GDP). This debt rests upon the maintenance of a prosperous overall economy's rate of return and 'full employment'."
Russell Comment: Unemployment is rising, low interest rates are impoverishing America's oldsters and savers, the dollar is fading. The Fed, consciously or unconsciously knows that the answer is INFLATE OR DIE. Those who understand the situation are looking ahead and buying gold.
I might add that the statement by Fed Governor Bernanke has been quoted and repeated far and wide. Obviously, the Fed wants it known that it has a "printing press" and will stop at nothing to counter the forces of deflation. Along these lines, I just received the latest weekly charts from the St. Louis Fed and I note that MZM (money of zero maturity) is rising at the fantastic annualized rate (Sept. 30 to Dec. 20) of 17.4%. Bernanke got it right -- the printing presses are going full blast. |
