Sign of further weakness in gold...

mariner67

From today's NYTimes....FYI only...

"Doug Ramsey, chief investment officer of the Leuthold Group, also finds gold’s decline reasonable because so many small investors find the decline unreasonable. He pointed out in a note to clients that demand for small gold coins rose sharply after the plunge. Because small coins are typically bought by small investors who often get their timing wrong, he takes that as a sign of investor complacency that heralds continued weakness.

“Analysts looking for a durable low in gold would much prefer to see panicked liquidation by these odd-lot buyers,” Mr. Ramsey wrote. But such a panic, which might signal an end to the decline, may not set in “for months or even years,” he said."

derryb

there is no weakness in gold's fundamentals, only its current price. And that is due to strength in the dollar index (actually nothing more than weakeness in the euro and yen) and the mad dash to cash. A revisit to 2008 investor sentiment and the subsequent results is in order. While gold suffered in 09 along with most all assets, gold's fundamentals were strengthened by new monetary policy which propelled it to new highs. The current panic is in paper metal and naturally, physical metal price suffers.

Keep in mind that dollar index strength only means a stronger dollar when compared to other currencies. Dollar value and purchasing power is a completely different animal to those that buy goods and not other currencies. The fundamentals that have changed are those concerning paper metal as the counterparty risk becomes more obvious. The long term outlook for the dollar and it's purchasing power remains bleak - a trait of all fiat currencies that are printed at will.

As long as physical metal price is based on paper price, physical price will continue to suffer from the risks of holding paper. Increasing premiums are a sign of a coming physical price independence. Counterparty risk with paper is what will eventually break the price on physical. A currently declining physical price does not reflect the demand or risk factors that involve holding physical.

Gold's best friend in the near term will be further monetary quick fixes that stackers realize are actually nails in a currency's coffin. The fact that most of the civilized world's central banks have a hammer in hand, while a bad omen for fiat currency, continues to be a good sign for the future of physical gold price

ricko

Thanks derryb.... excellent summation of the current situation. Cheers, RickO

cohodk

The author of the article is most likely correct.

Die hard pm bulls will have earned their stripes.

derryb

<< <i>Die hard pm bulls will have earned their stripes. >>


Why not, easy money doesn't last.

roadrunner

<< <i>The author of the article is most likely correct.

Die hard pm bulls will have earned their stripes. >>



You can say that again. This same guy in November with gold at $1724 was forecasting gold to $2,000 and had 6% of their primary portfolio in gold. The reasoning for this was
protection from long term currency debasement (still in progress). He also said back then that sentiment was not yet over the top. This guy wasn't right back then, why is he
correct now? No doubt, when he was 5% invested in gold back in November at $1724, he surely wasn't thinking of a decline to $1179 as even possible, let alone quite "reasonable."
Another interview "coup" by the NYTimes.

See 2:20 of video clip for interview with author

derryb

Looks like somebody sees a bargain.

cohodk

But I was led to believe that massive buying from China and India was support prices. What did the fundamentalists miss?

roadrunner

<< <i>But I was led to believe that massive buying from China and India was support prices. What did the fundamentalists miss? >>



That all the paper and digital gold weighs more than all the physical gold.

TwoSides2aCoin

Oatmeal tastes the same, but it takes more energy to make it. Not that this has anything to do with anything.

johnny9434

<< <i>Oatmeal tastes the same, but it takes more energy to make it. Not that this has anything to do with anything. >>

fwiw