gold

Anyone read The Australian "Pure Speculation"? The guy is ok, answers my emails but a little too partisan politically for my tastes. Anyhow, today's article is interesting from a gold point of view:

Usually, when reporting what analysts have to say, the routine is to condense their comments with perhaps one of two pithy quotes. But Warwick Grigor is pretty pithy throughout in his latest client note. And anyone who has gone weak at the knees about their gold investments should read what he has to say, take a belt of something strong, and calm down.

He makes the point that commodities and currencies came off against the US dollar when the euro was battered last week. But he goes on:

That was understandable, but what didn't make sense was the slump in the gold price. It should have actually moved higher. There is no point wondering too long on this, though, as we know that central banks and particularly the Fed take every opportunity (they) can to lay the boot into the gold price and still it recovers.

We have been saying for some time now that the world will have to reinflate to absorb the high levels of government debt, he continues. Some commentators have scoffed at this idea, saying it can't happen when there is a threat of a recession. Those people are being too academic, and not viewing the future with the cynicism that history forces on to us. There will be inflation, and that will be good for gold.

The IMF has just said there is nothing wrong with countries aiming for a 4 per cent inflation rate. Really! Why do they pick on that figure? Does that mean we already have inflation? If they aim for 4 per cent, do you think they can hold it at that level? They are preparing us for bad news.

It gets better. Grigor concludes: The announcement that the IMF will sell 191 tonnes of gold is just another attempt to hold down the gold price. When this tactic was last used in earnest, in the late 1970s, it just fuelled the rise in the gold price. It will happen again. Watch what happens when China or India snaps up the parcel. It will lead to a $50/oz jump in the gold price overnight. Keep buying those gold stocks and take advantage of the recent weakness.

Now, Grigor has never been one of your gold conspiracy theorists. In fact, his comments reflect a view that has now entered the mainstream of gold market commentary. And, more importantly, coincide with those at Pure Speculation.

http://www.theaustralian.com.au/business/mining-energy/be-brave-on-gold-and-vietnam-oil/story-e6frg9ex-1225833413094