blue ocean - im out!, page-20

tcf, your paragraph

'Investors are staying away like the plague because everyone thinks gold is set for a major downward correction due to improved world economics.'

is intriguing.

Since the peak of 2011, one cannot argue that gold, silver and PM stocks have increasingly become an unfavourable play for most investors. The herd are indeed running scared as they accept the notion that the POG will retreat further due to the perceived improvement in world economics. However IMO not 'everyone' agrees with your major downward correction prognosis, and history tells us that the herd are usually wrong.

In the face of horrible sentiment for PMs that is way overcooked IMO, it is interesting to see that China, Russia and many central banks around the world continue to purchase physical Gold in unprecedented amounts and there is no real evidence to suggest that physical demand is waning. If anything, the weaker prices are creating even more demand for the real stuff. However IMO ATM there is a definite and perhaps deliberate disconnect between the virtual POG & physical demand.

Long term however (and possibly even medium term) IMO both paper & physical Gold are well placed to thrive when unprecedented levels of Western debt eventually take center stage and the realisation of 'holy c...p, we can't even pay the interest, let alone reduce the principle' sets in. And the only choices left are war, bankrupcy or a rapidly acceleration of QE to infinity to reduce the debt ratio and in doing so, causing a Zimbabwe like destruction of the $US and other fiat currencies.

So far Helicopter Ben & associates have succeeded with their well thought out plan of...

begin transcript...

Helicopter Ben: 'Lads, I've got a great idea that I've been talking to our boss the Pres. about. I told him that we can inflate our way out of this mess we're in by purchasing our own debt. Yep, yep here me out. We can basically print as much money as we want anytime, right? Well why not purchase our own worthless bonds that no-one wants anyway & give 'em a sophisticated name like.. (pause) mortgage back securities. Yehhhh! If we print a ton of money then we can also help out our struggling mates down at the banks so they don't go bust, coz that'd be a PR nightmare for the Pres. Plus if we keep interest rates at near 0% so that the loans are cheap, that'll in turn mean that savings accounts won't pay interest so if the herd are looking for a return on their dough then they'll need to invest in the stock market or real estate. Boys, in short we can make the economy look great again. Whaddya think?'

Associate 1: 'Awww yeh, awesome idea Ben. High stock prices and property prices will not only make our economy look great, but people will think they're becoming wealthier to boot and will likely spend more, and this will make retail look good as well.'

Associate 2: 'Hmmm, yeah not a bad plan Big B. But first we need a return favour from our bank mates. We need 'em to dampen the price of Gold & that silver stuff a bit, plus our government mates can also give us a hand to print some fake employment data.'

Helicopter Ben: 'Fake employment data! We can't do that.... Can we?

Associate 2: 'Yeah, no, she'll be right. All we need to do is make sure that they don't include the lazy folk who have given up looking for work. It'll make the no.s look sooooo much better and we'll be making our boss the Pres. happy too. Besides no-one one will notice, mark my words lads.'

Associate 1: 'Yeah, agree A2, if we dampen the POG and fake the employment no.s then we can say to the investment community "look, see, there's no cause for alarm" and the herd will be none the wiser. Game, set and match! You beauty!!'

Helicopter Ben: 'Yeh, nice one lads. And let's not forget our our mates over in mainstream media who can help sell the message. It's about time they got a good news story'.

Associate 2: 'What about Europe though Ben? These PIIGS are in all sorts of s..t. Nevermind their debt, just look at their youth unemployment. It's worse than ours, and that's saying sumthin!'

Helicopter Ben: 'Yeh I know but it's OK lads, I've been on the blower to Super Mario and he's gonna sort things out. I gave him some tips on what to say, when to say it & how to say it. He was really receptive to my advice & told me in his broken English "Bennabee, I'll a do whadever itta takes, aww K". So no worries on that front. And our new mate Yoshi's gonna do the same, although I reckon he's a bit too Kamikaze about it all.
Now, let's talk about some important stuff lads. Where's my super size cuppa and who forgot to wish the Pres. a happy birthday?'

end transcript...

Jokes aside, IMO we are all led to believe that real western world government debt isn't the No.1 issue anymore and that everything's gonna be AOK. Hmmmm.

IMO we are in the eye of an enormous cyclone. The weak Gold hands are being or have been shaken out. Current sentiment towards the sector may last a while longer and therefore long term gold bugs may continue to suffer. However IMO this is the calm before another great storm.

And until gold breaks it's long term uptrend, the Chinese, Russians, and CBs stop buying, and the herd are proven to be right, I'll continue to remain a buyer/holder of PMs.

My views and silly transcripts are my own and not designed to form advice or influence. DYOR & consult a professional