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06:46
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Originally posted by DigDagg:
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Much optimism there is in the rally in the price of gold. "Surely it will have a positive effect on the share price of the gold miners and the gold explorers that have found payable gold." seems to be the thoughts of many. And so it should be, but first we have to allow the big money the sniff test. What do I mean by that? Big fund managers don't usually rush into a market in a panic buying mode. Right now they are wondering if this break out in the price of gold is real or illusory. They are waiting to see if gold has a new floor price and for that they need to see a pull back and bounce off US$2,040 - or a bounce off a higher Fibonacci retracement of US$2,040 to US$2,400 move. There are legitimate reasons for being cautious too. At the new price level of US$2,350 - US$2,400 every short ever written is out of the money and they are being closed out in a panic by the bullion banks and traders who sold gold short. And that means that some of this move is a technical move which may be transitory and that the price could pull back to US$2,040 once all of the shorts are closed out. Mind you, I don't believe that for one minute but then I am not managing and investing half a billion dollars either. I do think that at least some of this move is a real move and not just wild swings due to financial stress, reckless buying by central banks and a war premium.
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You're right, where money is earned comes investment money.
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