Gold – the final bubble, page-4615

Your questions leads to more questions than I have answers for myself. Sometimes I have to admit that I have only scratch the basic understanding of how the world economy interacts so instead of trying to put all the puzzles of logic and fundamental understanding together into one coherent view, I think my superficial understand is much better focused on to the peripheral indicators.

I have my doubts that the current sell off is the infancy of a major collapse in the capital markets. Sure, there is always major volatility reactions when the market is in disagreement with what the Feds are doing. Take for instance taper tantrum last year where it was anticipated by some commentators to be the start of the US economic collapse because the accommodative policies is what the US economy relied upon. Fast forward 1 year, the next hurdle is the first rate rise post GFC. Same argument that there is no way the economy can stand on its own without more accommodative policy = ZIRP.

If there was such a stressed event of economic collapse, any reason why the major money is not hiding in gold? I also don't buy the argument that there is a broken correlation between paper and physical gold price! Why don't you try walking into Perth Mint and demand they sell you physical using another price measure or tell them to take your gold bars at a higher than current quoted paper price. The brokers will do that anyway which the euphemistically call 'spread'. If you then sell it, you are getting whacked TWICE because they will play on your fear.

I have no idea how to rate China regarding hard or soft landing. The only measure is the MSCI commodity index and it is ugly. Commodity prices do not lie. Maybe look at electricity consumption nationally as a gauge? Look at Crude prices as another measure? US TBonds prices as well? Chinese levers are still to be pulled to stoke stimulus. Last resort, no one can sell any assets unless it is rising! haha

There could be more selling and buying aimlessly like the current 2 months as the fear and bargain greed take their turn commanding the daily movement. I have not got to the state where I am seeing the real blood on the streets yet so maybe this is just the start. I know nothing besides anything that ticks my big checklist and I dip my toe in cautiously. Let's see the market reaction when the first rate rise post GFC is announced