Insider

It's Better to Be a Year Early Than a Day Late

Use the time we have now wisely
Friday, December 14, 2012, 1:28 PM
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Executive Summary

  • Don't bet against gold, especially right now
  • Collective thinking and shifting baselines are putting us in great danger of a surprise we're not prepared for
  • When the next disruptive event happens, it will happen faster than the system can react
  • Where I recommend allocating capital right now

If you have not yet read QE 4: Folks This Ain't Normal, available free to all readers, please click here to read it first.

My Thoughts on Gold

Bluntly, anybody selling their gold here does not understand what is happening.  These are the most extraordinary and unique times that anybody has witnessed because the entire world is engaged in an attempt to print our way to prosperity.

Maybe that will come to pass, but the odds very much do not favor that outcome.  It's never worked before, and I really have not yet seen any articulate description of why it might work this time.  From a betting perspective, it's like facing a roulette wheel where every slot is black except for that solitary green bin.  People selling gold here are placing their chips on green.

But I don't really think that gold's current market price or recent behaviors have anything useful to do with gold's value here.  As I noted in a recent Insider, in the run up to the QE4 announcement and then in the days right after, some entity has been selling literally thousands and thousands of gold contracts into the thinly traded overnight markets so rapidly that we have to use millisecond charting to see it for what it is.  Again, there is no other legitimate explanation for this activity of which I am aware besides having an intent of pushing the price down.

Whether there is some motivation for this activity besides 'making money,' I remain convinced that the gold market, like many others, is no longer sending useful price signals. Instead it is telling us that some entity has found it useful to sell thousands of gold contracts all at once.

The interesting part of this story is that this has been the most sustained, intensive, and yet ineffective gold-selling that I have yet seen.  In the past, such bear raids, as they are called, would have resulted in a sharply lower gold price.  Right now, that has not yet really happened. 

I am wondering if a big up move is not right around the corner for gold.  I can tell you that if even one fourth of the recent QE effort was announced five years ago, markets would have exploded and gold would have absolutely launched...

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