Richard,
This thread seems to be getting very quiet. I apologize for being late posting the Barron's GMI bit but there aren't any surprises. I also apologize for not responding to your post promptly. We have been caring for our Grandson and that comes first.
Barron's GMI was 358.22 on 6/18, down from 361.36 last week. With the POG at 293.65, the ratio is 1.22, up slightly. The indicator is quite bullish.
I don't know enough to have a meaningful opinion on the impact of Japan buying gold, but it would sure seem significant to me. The discussion/debate on the various threads where Bill has been posting has become even more interesting with Hughes having joined in. However, I find the thought of a CB conspiracy to hold down the price of gold hard to accept. Common interest may play roll but, as was pointed out by someone, the interests of the various CBs are diverse.
With respect to the POG, I would think that the forward selling had a greater negative impact during the past couple of years than CB selling (I understand it has been much larger than CB sales) but that, once there is a consensus that the price will turn up, forward selling should stop and the lack of selling by CBs will be a major factor. I have a little trouble with Bill's view that CB selling is all that matters. However, I would have expected forward selling to have abated during the past Feb. and March but the rise in the POG didn't accelerate. I suspect that there wasn't a consensus that the POG has turned up but Bill is probably right and CB selling may have held it back. Reduced demand in Asia probably contributed to the softening of the rise.
My bottom line is that the POG needs something to jump start a rise and that, once there is a consensus that it has started, the rise should accelerate. There seems to be several events that individually or in combination, could jump start it. A few of the more obvious are:
1) An announcement that Japan is buying.
2) An announcement that the Dutch have completed a major sale.
3) An announcement by the ECB that their reserves will include more than 15% gold.
4) An announcement by the ECB that no further sales from national CBs will be permitted for some substantial period of time.
There many more possibilities, including a breakout of hostilities in the Middle East or a dramatic/unexpected change for the better in Japan, but the above 4 are those that seem most probable at the moment. However, I'm sure you can add several.
Of course, there are a number of possible events that could send the POG down further. I'm not a Elliott wave fan but Auger has had a good record since I have been following him and he seems to be suggesting that we are heading lot lower before we get the bull market that we are all looking for - scary. And, his time table seems consistent with Armstrong's view that a low in the POG is most likely in late July. I sure hope the low, when it comes, if it isn't behind us, isn't much lower.
At the moment, I'm at least as concerned with what has been happening to the prices of the base metals. Copper, Lead, Zinc and Nickel are all down dramatically. Have you noticed that the INCO's VBN stock has fallen like a rock. I suspect that any rise in their prices will follow a rise in the prices of gold and silver. Do you agree?
Cheers,
Larry |
