Indeed it was an interesting day for the miners. Did I spot money flowing first into the larger cap names, before the Juniors? A wan smile crossed my face.
I think we are very close to Four Horsemen days, when bonds, stocks, dollar fall and gold rises. There was clearly some speculative extension in gold on the downside and, down at those levels, the buying power of those looking to get in dwarfs trend-seeking traders. I'm glad they pushed gold so low into week's end. Given the 60 dollar smackdown, I still think there's risk in the next 30-60 days for gold to tack on 4x that, or 240 from the 1050 level.
One thing to keep in mind and I am sure you are, is that to bail out the credit crisis Part 2: Sovereign Edition (heh) there is no central bank on the moon to take on the planet's liabilities. I know that jubilee will come eventually, in some form. I just don't know how it will play out. I also know that the crisis will finally move to its ultimate resolution when enough of the current political class is kicked out of office, and the leverage which currently distributes capital at the public trough goes away. I dont expect this to happen on the Federal level first, however. I expect the revolution to begin on the City and State level.
I see a coming clash between State/Union workers vs the needs of the growing unemployed. Looks to me like a surprising de-hoarding of govt workers is going to take place--starting on the state level.
Next comes the recognition phase where all bond holders everywhere realize the cash flow to support all govt debt just is not there.
I wonder that gold right here, right now, is in a similar position to oil in 2008. Ready to rip into some shocking late Q2 highs, that will eventually take the miners with it as everyone looks for a "solution" to the problem of holding liquid capital in all currencies.
Best,
G |
