Dear Extended Family,
As the volatility of gold rises, a two-day $200 reaction should not be considered anything out of the ordinary.
A hard sideways chop is the present scenario.
There is no top in gold. There is no bubble in gold.
Truth be known, what will vault the price of gold is good for equities as well.
Score Card: For the year to date, gold is up over $400 (29%), while silver is up $10.50 (34%). In the last 12 months, gold is up $557 (45%), while silver is up $21.50 (113%). Yes, gold and silver have been in a decade-long bull market, but the yearly percentage of the gains is now increasing.
We live in the age of information. What is different this time around with gold is that more people are aware of gold. I ran across an interesting study, tucked away in yesterday’s Five Min. Forecast that was a real eye-opener.
Noteworthy was the demographic breakdown. Gold tops all political affiliations, income levels, age cohorts and genders:
The age progression is what caught our eye. Age is correlative. Baby boomers are turning into gold bugs, and so is Generation X. The older Silent Generation? They’re already there.
There are millions of up and coming baby gold bulls waiting on the sidelines. There are two other factors to consider as well. China has moved up the ladder into the number two position in gold consumption, swallowing up almost as much gold as the US and Europe combined.
This is NEW demand. How long before China passes India and vaults into the number one slot? Not long, I say. And then we have central bank purchases. Keep in mind, a few years ago, central banks were SELLERS and it was their sales and gold leasing that capped the price of gold. Now they have turned into BUYERS and the swing is in the hundreds of tons.
Put the three together – more awareness of gold (new buyers in the making), China’s growing interest in gold and central banks moving over to the bullish side and the supply/demand factor is firmly in the bull’s camp. This is the “big picture” when it comes to gold. If you can’t see it, you are fooling yourself. Those who talk about gold being overpriced, or in a bubble or about to suffer a major correction are dead wrong. Those who worry that gold is too expensive should re-read Jim Sinclair’s quote, leading off today’s daily, “There is no top in gold. There is no bubble in gold.”
We are now entering the “best” time of the year for gold. For the next six months, gold demand is the strongest. There is a growing belief that the Fed will offer up even more monetary stimulus in their September meeting. That, my friends, is a powerful combination – QE plus seasonal demand increases! Hop aboard now and enjoy the bullish ride.
Forget the newsletter writers that use technical analysis to explain why gold will correct down into the $1600 range or lower. Technical analysis does not take into account the factors I mentioned, above. Technical analysis is based on the action on the Comex in paper gold. I am talking about the huge, and growing demand for PHYSICAL gold. It is PHYSICAL gold that is moving the market, not the banksters like JPMorgan and HSBC who use the Comex as their personal play pen.
“There’s a bright golden haze in the meadow.” I always have music playing in the background, when I am writing the daily. Could this be a sign – Ray Charles just came on singing Oh What A Beautiful Morning (Ray Sings, Basie Swings) and the opening line of this classic (There’s a bright golden haze in the meadow) is what I call, appropriate! I could use it as the title for today’s daily. Yes, I think I will.
If you want really outstanding sound at a ridiculous price, hook up your iMac to a small pair of B & W MM1 desktop speakers. The speakers cost just $499 and can hold their own with speakers costing several times that. I have downloaded 2,000 songs onto my iMac and always have great music, of my choice, in the background as I write every day.