Jul

11

 "Gold has 'unlimited upside' because the Fed is 'confused' on policy: Trader"

I am not bearish on gold trends but don't like some sentiment indications. Stories like this are disconcerting. Once the sales traders at the institutional brokerages start talking unlimited gold prices on TV then it shows that the reflexivity experts have won. One group the reflexivity experts know about is trendfollowers. How much money will be made on 20 day breakouts versus the 20% vig the managed futures experts will pay themselves? Part of the common core curriculum should include counting bars in candlestick charts apparently. They can about percentages later.

anonymous writes:

Prices have, do and will rise and fall. Gold included.

But I'd switch this notion of "unlimited upside" from gold to fixed income. If JGB's can yield negative 0.25%, why not -1% or -2%? Same for bunds. Same for UST's…

Who among us can now say what the upside is on fixed income prices?

(This is not a bullish prediction. Rather it's an observation. And a reminder that trends go further and last longer than reasonable people expect.)

Ad absurdem, if the 10 year libor rate is negative 1%, then gold will be a positive carry investment– and the forward price will be well below the spot price. Either that must happen or the arbitrage/gold lease/borrow markets will break down.


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