for all the gold bugs, fleck's thoughts on miners (FWIW)
Turning to gold, I have received a number of emails questioning why gold and gold stocks are acting so poorly. The latter have been acting heavy because obviously, the metals have been kind of stuck in a range. Frustrating as it has been for everyone (myself included), all the reasons that have bolstered my desire to own gold are now coalescing. I am referring to the combination of inflation/stagflation, problems in the financial system, problems in the stock market, and problems in the economy -- i.e., the whole "next-time-down" thesis. Also, the world is coming to see that all the major paper currencies have serious flaws. In my view, the potential chaos for the euro should be beneficial for gold.
But we haven't arrived at that point yet. We're caught in a moment in time where gold has in fact gone down on events that in theory should have made it go up. For the moment, motion and emotion have the upper-hand. What is not hurting gold, in my opinion, is higher rates. Interestingly, higher rates have often coincided with higher gold prices.
Again, I know that this shakeout in the metals is frustrating. What's different about this one is, it's hard to be bullish on any currency as a catalyst for gold, versus the past, when we had the euro to lead the weaker dollar parade. Gold has done well in the last couple years as the dollar has declined against the euro. But being a euro surrogate wasn't the reason to own gold.
The Steadfast Gold Soldier
In sum, I continue to look for gold to rise in euro terms as a sign that it's standing on its own legs. All the developments I've been waiting for, which are bullish for gold -- and silver -- are coming together. What's not knowable (either by myself or, I am assuming, anyone else) is when others (i.e., newcomers, like dollar bagholders) come to the same conclusion. As I've said in the past, the goal of the market is to get you bullish at the top, bearish at the bottom, and confused in between. I do not intend to be shaken out of my gold position. Perhaps between tomorrow's TIC (Treasury International Capital) report and this weekend's G7 shrimp fest, we can create a low that can be bought. Stay tuned. |
