Hmmm. This is a fascinating topic, and gold is definitely a stock which does not have a straight trajectory; it is however indicative of the times.
Context: very few people were buying the crash scenario ahead of the 08 fiasco. What amazed me was the time it took for this to occur; it seemed to take an age. Same with the dot com bubble, it was glaringly obvious a massive correction was going to occur, but people just did not WANT to believe it. Inertia and letting the market take control.
Now we are in unchartered waters, people are still stunned and confused. It is kind of wishful thinking to suggest that everything in terms of economic policy is under control; it is only barely chugging along. The euro situation has stabilised but the underlying problems have not been addressed, same with the US situation, UK etc.
Where the market is trading on sentiment, and in very low volumes, it seems everyone has become a chartist. In this case, the market develops self-fulfilling prophesies which last only short term. This is happening to the entire market.
In China anedotal evidence is that the people do not trust what the government says. Some are buying gold as a hedge against inflation, and because there are limits on investment housing. Inflation levels there are more in the vicinity of 10%, not the official 2%. It is regional however, some will not touch gold because of the risk of theft.
I hold only mining and energy stocks, and some gold stocks. Even if the gold story turns out to be a furphy, it is ok to hold some speculative positions. We may have seen the height of the gold boom, but instinct and the context tells me that is probably not the case.
Very interesting times, in the chinese sense. China and India are the main story for the future. Let's see what what that story means for us. October will be a clue.
