Anyone who uses Goldman, JP Morgan or Bank of America/Merill as their investment custodian is either ignorant, stupid or completely insane. - Dave in Denver
IMF: Gold Is Scarce “Safe Asset” And “Rising Demand for Safe Assets”..."In the future there will be rising demand for safe assets, but fewer of them will be available, increasing the price for safety in global markets.” - quote sourced from http://www.goldcore.com/ LINKWell, there ya go. In fact, that quote ties into the subject of my title, but first I wanted to comment on potential for the bottom of this vicious precious metals correction that began in late April last year. The sentiment indicators are at rock bottom. I can say from some of the comments that have been posted on my blog over the past few weeks that even some pretty long time gold bulls have thrown in the towel on the mining stocks. Usually this type of sentiment marks the bottom of the next big move higher.
Also, Dennis Gartman,who happens to be singularly one of the best contrarian indicators of the gold market - and this fact has been close 100% consistent over the last seven years that I've been aware of Gartman mentioning gold in his newsletter - declared the end of the gold bull market about a week ago. Gold is up 5% since he advised his readers to dump gold. This so reminds of late 2005, when gold had a very difficult time breaking through $500. Gartman sold everything. Gold then proceeded to make a huge run up to $1000 before the next nasty correction. Gartman missed most of it.
That chart reveals the golden truth. Gold has now corrected and consolidated into a seriously bullish technical formation. Given that the fundamental backdrop - all of the factors constantly discussed on this blog - is significantly stronger than at the end of the last two nasty corrections, per the red circles above, the next move up in the metals/miners could be breathtaking.
Finally, for some icing on the cake, take a look at this article from Marketwatch on the Hulbert Gold Newsletter Sentiment Index: LINK The index reading now is -15. Historically, as Hulbert points out, extreme negative indicators for this index have signalled a big move higher in gold. In fact, to quote from the article: "analysis of gold market sentiment over the last three decades has shown that, at the 95% confidence level that statisticians often use to assess whether a pattern is most likely genuine, gold tends to do better in the wake of low levels of bullish sentiment (like now)." 95% confidence level is a very high level of confidence in which to invest...
The subprime bubble is being reinflated with your help. This should scare the shit out of everyone, because Taxpayer money was used freely by Obama and Geithner to bail out the big banks the first time around. You can be sure that it will be again. Just as an anecdotal aside, I heard an ad on the radio yesterday for a mortgage broker here in Denver, First Option Lending - who was promoting 0% down payment mortgages. There's no doubt that this program is coming from the FHA and therefore is a taxpayer subsidized program.
Here's an article from the New York Times which describes how lenders are once again loaning to high risk borrowers: LINK Even worse, AIG is back to investing in real estate again: LINK I guess inflating and blowing up AIG the first time around, with about a trillion in taxpayer assistance, was so profitable for AIG insiders, Goldman Sachs and JP Morgan that all the players are coming back for round two. This should first make the hair on the back of your neck stand up and, second, make you move as much of your paper wealth into gold and silver as you can. NOT GLD, SLV, GTU, CEF etc. (PHYS and PSLV are exceptions to this).
Remember the invisible 2x4 that is now being swung at the collective heads of the middle class? This reinflating of subprime is added fuel to the speed and power of that swing. And it's the epitome of the moral hazard that is embedded in the system. Make no mistake, the people who are doing the "swinging" are going to get even wealthier when the 2x4 connects with your head, unless you know how to "duck." Got gold?