Hello fellow posters.I have always been an occasional poster,but the recent tumultuous events prompt me to write again for the third time in quick succession.If by now,you are not bored rigid then please try to bear with me.
In my last post I wrote that the ensuing crushing worldwide queues for physical gold were largely due to peoples natural millennium old affinity with gold(they love the stuff),and that the $200 drop in price was enough to bring them out.I still think that to be true,but the story on reflection does not stop there.
The Big End of Town gold paper shorters tried to convince us that for now gold's appeal was over and a price of $1200 was in the offing.Us mere mortals were expected to simply roll over,take our bitter medicine,and keep the over printed USD safe for now.Furthermore we were being massaged by talk that despite this ongoing money printing,inflation was benign, and currencies were not being debased....a high gold place has no place in this brave new world.What this implies is "New Fundamentals"-none of our "wise men" in suits came out and said this because past experience shows that talk of "new fundamentals" is an indicator that the game is almost up and that there is some nasty reality waiting just around the corner.But the "suits" have lost credibility.They led us into the GFC,personally did not suffer,and in essence have continued with similar "clever than by half" synthetic financial shenanigans which are essentially not much different to a bet on red or black at Las Vegas.The big difference is that us mere mortals are still expected to cover their losses because they are "too big to fail, and too big to jail."
But this time they miscued.The common herd has had enough and will no longer believe these "professionals." To suggest that printing huge amounts of money will have no damaging effects is "COUNTER INTUITIVE"- I.E. the brain will consider it, but the heart, as Frank Sinatra said, won't buy it.That is at least one more reason why they queued-people have lost faith in the conduct of the whole financial system.This has become further exacerbated by recent comment that the paper gold world is just that-largely paper-Comex physical gold stocks are reported to be much lower than needed to cover current contracts.A further glaring example of this type of trickery is when an investor tried to redeem his gold from a Swiss bank,but was told-"sorry, no gold, but we can settle in cash." Where has the gold gone?
Hence the queues.No wonder that Goldman Sachs saw the writing on the wall and headed for the door early-the queues were not part of the script. The "queuers" are made up of hoarders,people looking for a safe haven and short term speculators...but they have one thing in common...they have lost faith in the official system.This is putting enormous pressure on the paper gold world with the outcome being anybody's guess.However the gut feeling would suggest that the outcome will not be pretty.Who knows?
As a final observation...from an historical perspective the power of queues is not to be underestimated. The interminable food queues of the "Worker's Paradise" played a major part in bringing down the old Soviet Union.Although not an exact anology rest assured that the current queues are giving headaches exactly to those people who deserve them.
Right now the POG is off a bit.Competing forces are in play.Where is the price is heading? As said before...Toss a coin!
MYG Price at posting:
5.1¢ Sentiment: Hold Disclosure: Held
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