Gold Bear Bugs

Gold bear bugs are rubbing static electricity into their very palms with glee as their hair rises on their heads with the anticipation of the gold price crash. Its true, people believe this in their heart of hearts and want to get in on the action as soon as possible.

The last time this occurred was when the HGD.TO was IPO'd @$500.

They'll even throw money away on what they see as a no-brainer, risk-free bet. The price action in HGD.TO suggests that a rally is underway, with a moving average crossover. The price is higher now than when the low in gold prices was put in @$1544/oz., a few weeks ago.

While I think that gold bear bugs are in for a rude surprise. Its a common belief that the gold bull market is a mere speculative bubble and that the gold price will crash.

The more reasonably informed will say that the gold price will adjust itself to the new reality which is ~$1200/oz. They have decided this. The GBN.V luminaries are of this point of view. The less-informed will choose some arbitrarily determined number, such as ~$500/oz.

supersize: http://www.flickr.com/photos/11747277@N07/6864942246/sizes/l/in/photostream/

stockcharts.com

Why would reasonable people chose a patently false argument? Because if they were to recognize inflation finally, and that the gold price is rising due to inflation being ahead of bond yields, then they would come to the sudden realization that their lives are futile. Its that serious.

The chart that they point to is the following, not without some justification:

I am surprised that they would allow such an analysis to be posted on a website which has made the case for inflation and adjusted their point of view for inflation on just about every issue. So why not this one?

Because then they would have to admit the calamitous decline in the purchasing power of currencies, especially the U.S. Dollar since yr. 2000.

http://advisorperspectives.com/dshort/guest/Chris-Kimble-120229-Gold-Update.php

-F6