Dec

2

My take from eyeballing this chart of the day about the gold market: one should prepare in advance for buying opportunity. Chart is longer-term Bullish, as most asset charts are LOL. Trick is: gold bugs are getting progressively more rattled by the corrective phase that commenced 2011. More often than not, the nadir of such correction will trade very quickly - leaving the unprepared behind. Not sure one will be able to buy size on final low (as the algos are very adopt in frontrunning both ways). So if one is looking for size, and just needs to fine-tune timing, one should explore all kinds of venues. Gold equities will be the most leveraged Bullish bet. But the real deal is physical gold (stored under your control). Eventually, when Gold is attractive for extraordinary financial panic reasons - physical will outperform by leaps and bounds!

All this being said, the final low print will likely occur deep in three-digit territory. Any initial Fed tightening will hit all assets hard.

anonymous writes: 

Seems to me like a test of support at $1000 round, which was the 2008 crisis year high, might be in the cards one of these days.

Stefan Martinek writes: 

Re: "Not sure one will be able to buy size on final low (as the algos are very adopt in frontrunning both ways)"

I do not understand what algo story you are taking about. You want to buy a multiyear low and then you are afraid to miss the last tick on a decline? There will be plenty of time. Days, weeks, historically even decades (1980-2000). Who cares about "algos". I cannot even comment on Elliott voodoo. This flawed concept cannot be falsified, at the end it is always right regardless the number of counts. We all know what this implies.
 


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3 Comments so far

  1. Bryan on December 2, 2015 6:11 pm

    $650 bid…

    Seriously, no reason to step in front of continued USD/EUR strength (I subscribe to the theory that currencies always overdo it… always).

    When you finally hear of Americans traveling to the EU with empty suitcases to load up goods b/c the exchange rate has gone to $0.75…. then perhaps it will be time to think of accumulating…

    Once the dollar rolls over… which one accelerates of it’s multi-year-lows faster Gold or Crude… remember 2004 how that spread was the talk of the town (age myself)?

  2. Ron Vincent on December 3, 2015 3:55 am

    Hi Anatoly,
    I agree but I believe the event will be another downgrade of our 30 yr bond which is now AA+
    Back in Aug 2011 gold peaked right after we went from AAA to AA+.
    The reason for the downgrade was the federal debt which ( not sure) was around 13-14 TRILLION.
    Currently the Debt Clock shows 18.6 TRILLION & rising.
    Your thoughts!

  3. Anatoly Veltman on December 4, 2015 7:12 pm

    Ron, I must agree on Bonds. It’s not only that I wouldn’t want to hold a Long-Term instrument yielding 2% (or even like .2% in EU core)…I even less would want to suddenly become a buyer of an asset that has risen in value for 35 years (since 1980)! I don’t think any astute investor should miss the first 35 years just to join in now LOL.

    Gold, on the other hand, just had 12 years up and now 4 years down - so that’s a relatively more attractive entry. You rightfully point out that all fiat currencies are getting exponentially bloated. Whoever asserts that Gold does “not fall within currency characteristics”, should ask themselves why then Central Banks hold and add Gold to their reserves.

    One hindrance of late had been that petroleum-exporting countries have had their budgets raided, and thus couldn’t partake. Plus, individual Gold investors get more excited on way up than down. And thus, demand has been sluggish. But supply has been merely satisfying demand. Not crushing it - like in case of Black Gold. So I view the last four years as more of a lull than a “new bearish trend” the original linked article “discovered”

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