Slider, Gold didn’t quit you – you quit gold!
I’ll give you credit for being bullish on gold during it’s darkest days and I’ll give you credit for your swap out of gold and into silver and palladium. I’ll even give you credit for your prescient call of the top in May.
But my friend, as you know – in this business; you’re only as good as your last call and I must ask – “what have you done for me lately?”
Gold is the most resilient and the most flexible of all investment vehicles when allowed to trade freely. Gold has only recently broken the shackles of Central Bank intervention and is just now beginning to show it’s true colors. A big, bold, beautiful shade of yellow I may add!
The beauty of Gold is in it’s versatility. Gold can trade as a commodity, it can trade as a currency and it can trade as a safe haven during times of turmoil.
On the commodity side, we are only in the early stages of a generational bull market. There are three undeniable long term catalysts for this move.
1. The insatiable appetite of China, India and the emerging economies of the world.
2. A generational repudiation of paper currency for hard assets.
3. Massive global inflation and expansion of the money supply that can not and will not stop.
As a currency, Gold offers the lone refuge from the ravages of inflation. We have reached an unprecedented level of global inflation and it is not just the USA that is running the fiat printing presses on overtime. Here are the expansion rates in money supply for the major global economies over the last year.
- Russia has increased money supply by + 43%.
- India has increased money supply by + 20%.
- Brazil has increased money supply by + 17%.
- China has increased money supply by + 15%.
- Great Britain has increased money supply by + 11%.
- France has increased money supply by + 8%.
While I congratulate you for your exit call in May and concede your short-sided profits of late; I think you’ve fallen asleep at the wheel here my friend, and here’s why.
First, I believe that gold has not failed, but merely got over-heated and needed time to cool. John Hathaway in his recent piece entitled: “Trivial Pursuit” said it best:
“Gold's recent sharp correction as well as its earlier sharp run up in the first half of this year is a case of mistaken identity. Perhaps hundreds of billions of new institutional money has flowed into the commodity sector. Proponents have billed it as an "alternative asset class," and imply the returns would somehow be uncorrelated with financial assets. In most cases the mandates have provided for passive adherence to an agreed upon commodity index. This money flow was anticipated and front run by hedge funds and other aggressive managers.”
Personally, I would have preferred a long, slow, steady march onward and upward for gold. Unfortunately, we had a parabolic blow off top due exactly to the reasons identified by The Tocqueville Fund’s John Hathaway above. Let’s not mince words here. It was hedge fund speculation. We need look no further than Amaranth for that. But, while gold has fallen from the headlines, while even it’s most stalwart supporters and loyal believers have begin to doubt it’s truth; something has begun to happen.
While gold was knocked down, it wasn’t out. Not even close. It has now climbed back to it’s feet here. It’s dusted itself off and is now strongly back up on both feet and ready to square off against all comers once again!
And here’s proof.
For the first time since the May correction, gold has finally reversed trend and is now breaking out against all currencies! Feast your eye’s on this ole’ sly one.
Gold:Euro Dollar
Gold:Swiss Franc
Gold:Japanese Yen
And look at gold’s strength even against “the commodity currencies.”
Gold:South African Rand
Gold:Canadian Dollar
Gold:Australian Dollar
Gold is even leading commodities themselves:
Gold:CRB
And Gold has actually broken out against the DOW – even as it has run to record highs!
GOLD:DOW
Slider, Gold is speaking to you – can you hear it?
Wake up my friend. Gold has just broken out against all money-currencies, against the CRB commodity index and even against a record breaking DOW!
As you like to say – WHODATHUNKIT?
Slider, in closing my smackdown; I’ve got just one last thing to say.
Gold didn’t quit you – you quit gold.
And Slider, I know that you know –
QUITTERS NEVER WIN!
But, Gold always will.
Your pal,
“Mr. X”
PS: Got M3? |
