USA and the bull run in gold

JulieW · Jul 18, 2012

MSN no less:

http://money.msn.com/bill-fleckenstein/post.aspx?post=23c64e21-4e78-4648-84f2-3e80ec0a3dd8

However, an additional big negative for gold (in the form of negligible demand) has been the lack of any serious U.S. buying (although the hedge fund community was a big believer last year). Now though, when you look at their view, as expressed by positions in the Commitment of Traders Report, it looks like more of the big, futures-oriented hot money (i.e., hedge funds and commodity trading advisers) is short.

More importantly, a big buyer who needs to own gold, but doesn't thus far, is the "average" wealthy American. I think that is unquestionably what has ailed gold stocks, not their own fundamentals, which have been disappointing from time to time, but not nearly as bad as the stocks' behavior would suggest.

The bottom line is that the bull market in gold has been more global than American.

Who knew mad men were so sane?

At some point, though, I continue to believe that more American investors will start buying gold, though I have no idea what the catalyst will be. Recognizing that an idea has to start somewhere, or that as the Chinese say, a journey of a thousand miles begins with the first step, Thursday's Wall Street Journal carried a two-page pullout advertisement by Charles Schwab with the banner "A different view of risk" and tagline "Bubbles, crashes, and downturns are going to happen, but you can take steps to find opportunities in risk."

The ad goes on to give a short primer on one facet of the bull case for gold, which is paid off by more big type: "All that glitters: How gold is impacted by the paper value of money." It then accurately concludes: "By printing money the Fed is actually debasing the value of its currency. This is where gold as an asset class comes in, because (Stephen) Cucchiaro (chief investment officer at Windhaven Investment Management, a Schwab affiliate) sees gold as an excellent way to measure the value of paper currency. It isn't possible to print more gold; the amount aboveground is relatively fixed, so as more money is printed, it takes more of it to purchase the same amount of gold. The result: the price of gold goes up and the value of paper money goes down."

There, ladies and gentlemen, is the bull case for gold in a nutshell, and eventually more folks are going to realize this. The reason I bring all of this up is because gold bulls feel tortured after nine months of correction (which may go on a bit longer). But in my opinion, given all I have described above, the next rally in gold, when the Fed finally acts, is going to be huge. Thus, I think gold investors need to be mentally prepared for what they might do if that is the case.

Anyone with gold exposure probably doesn't need to take that much action until it looks like the powers that be are finally panicking. But when that moment arrives, gold bulls should make sure they have the positions they want, so they can capture attractive (even if a little higher) prices, rather than paying up after the market has rallied a long way and exposing themselves to more risk.

For now, gold owners should remember the saying, "Just when the caterpillar thought the world was over, it turned into a butterfly."
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errol43 · Jul 18, 2012

JulieW.. Interesting post^^^^..Great input .. Keep up the good posting.

Regards Errol 43

sprite · Jul 18, 2012

The greed in me wants gold to go up

The fear in me wants gold to stay where it is

Once gold reaches $5000 or more an ounce, the world will be a very different place. Not one that many of us will find particularly palatable. This is a fundamental conundrum that many gold bugs seem to continually overlook.

Keep stacking those baked beans

grinners · Jul 19, 2012

sprite said:

The greed in me wants gold to go up

The fear in me wants gold to stay where it is

Once gold reaches $5000 or more an ounce, the world will be a very different place. Not one that many of us will find particularly palatable. This is a fundamental conundrum that many gold bugs seem to continually overlook.

Keep stacking those baked beans
Click to expand...

At $5k, I don't think it will be that much different. If it gets to $50k then we'll talk.

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USA and the bull run in gold

JulieW Well-Known Member Silver Stacker

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USA and the bull run in gold

JulieW Well-Known Member Silver Stacker

errol43 New Member Silver Stacker

sprite New Member

grinners Active Member Silver Stacker

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