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Strategies & Market Trends : Technology Stocks & Market Talk With Don Wolanchuk
SOXL 53.91+8.6%Jan 9 4:00 PM EST
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From: cycleupcycledown6/10/2012 11:12:27 PM
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I'm thinking the trouble in Europe might be bearish for gold, the CB'ers may dump sum if things get out of hand...From a Forbes article a year ago..................In their rush to buy gold, and gold denominated assets, investors seem to overlook a number of risks associated with holding gold—some outlined in great detail in the prospectus of mutual funds and ETFs that invest in gold. The SPDR Gold Trust (NYSE:GLD) prospectus, for instance, lists six factors that may cause sharp fluctuations in the price of gold:Global gold supply and demand imbalances that can be fueled by selling of the metal by gold producers and central banks.Geopolitical eventsChanges in inflationary or deflationary expectationsCurrency rate fluctuationsInterest rate fluctuationsInvestment and trading activities of hedge funds and commodity fundsThough the materialization of each of these risks can cause a sharp correction in the price of the metal from these historically high levels, I do find the possibility of central banks selling gold as the most devastating for the price of metal—especially if sales come from the US that holds 27 percent of world gold reserves, and the Euro area that holds 35 percent. Can it happen? Will it happen?

Hard to say, but selling gold for heavily indebted nation is an option to draw liquidity in a case of a temporary default or to avert a run on their currency—just a warning to those who think that gold prices always move in one direction only, up.
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