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Strategies & Market Trends : Strictly: Drilling II
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To: ItsAllCyclical who wrote (26821)1/27/2003 5:41:38 PM
From: BSGrinder  Read Replies (1) of 36161
 
I don't follow the logic in thinking that non-goldbugs are going to start buying only if we revisit POG 340 or 350. I think the non-goldbugs start buying at higher, rather than lower, levels. They are only going to become believers in gold if it sustains significantly higher prices. But they are still not in yet. Gold is currently being purchased by very strong hands (unlike the gold stocks). Given the macro backdrop that we here all know, what major player in his right mind would be trading gold in size for dollars right now? Only someone trying a rear guard action to defend a short position.

Furthermore, I'll bet that an unusual number of gold contracts take possession at the end of this month. We haven't seen the commercial shorts cover, and we haven't seen the end of reduced gold hedges. And does anyone really think that as soon as we attack Iraq, all those Asians who have been buying gold up to now will suddenly want to trade it back for dollars? All of which puts a serious floor under the gold price at these levels.

As long as the POG stays firm and rises, the gold stocks are not going down significantly. They will have periodic swoons like today, when traders rush to ring the register. But I don't think we are going to see these prices in either gold or gold stocks for very long. I agree with other voices on this thread who have said that the retrenchment will come from higher levels. I'm still all in.
/Kit
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