I wrote the post to try to help others with gold. If one holds gold in some form, it's as dead as it is heavy. You have to have a lot of guts to buy it. Psychology is horrid. The chart is horrid. If this phoenix is going to rise again, it will have to be from some unanticipated cause. However, the inevitability of things to come from things being quietly put in place, can't be denied. The world runs on cheap oil and cheap labor. Both will get more expensive and the world may not easily adjust. They say you have to buy when things look putrid; well must be time to buy. Seems there has to be a visible "reason" to buy.
I felt the BOJ would open the money flood gates, but instead they are persisting with this absurd neo-mercantilism geopolitical economic strategy. They are painting themselves into a corner where they will have to start pumping and they will have wasted so much time that the pumping has to be extreme. When central banks go to extremes, they often miscalculate. If the world's wealth center overshoots and creates excess money, the propensity to inflate rises faster than the stimulus to material demand. Because the yen is low that demand doesn't go to foreign purchases, it goes to domestic sources. That's fine for Japanese corporations because they would raise prices to recover from the recession induced lack of profitability. The rate of increase would be much faster than productivity could compensate. You'd get rising inflation in Japan and rising platinum and gold purchases by them. That would remove any Swiss generosity.
I haven't got the "re-arranging the chairs on the deck of the Titanic" feeling yet, and it is hard to find anyone except the gold buffs who think this is a viable investment. I like it for another reason. Just like oil companies several years ago who were making money though the oil market was a disaster, some gold companies are making money even though the bullion price hardly keeps you out of debt or bankruptcy. Any company that can stay profitable under extreme adversity has to be something to consider for investment. I have to say that the price of gold is buffeted significantly by sentiment and so there isn't any conviction about it. Also the linkage with oil is strong, but there is the slightest divergence developing. When oil is weak, gold is not as weak, but when oil firms up, gold keeps up.
Hope my cheerleading is helping someone. |
