Gold Editorials & Commentary

Today, with the release of January's $58.3 billion dollar trade deficit (the second worst monthly result on record), the enormity of the imbalance was once again overshadowed by the rhetoric immediately following its release.

Introduction

For non subscribers and those new to my commentaries, here is a recap of what is happening with gold and gold stocks.

Something about the markets has been worrying me at a subconscious level over the past few weeks. There are too many "obvious" signals being given - of which the following are but a few:

Caveat: This article has been written by way of a "brainstorm session" of a type that is typically used in Corporate strategic planning sessions.

With oil prices consolidating above $50 per barrel, forming a base upon which future price increases will likely be built, there is no shortage of Pollyannas willing to dismiss the toll higher oil prices will exact on the U.S. economy.

According to Warren Buffett’s Berkshire Hathaway annual report, which is hot off the presses, the world’s most successful investor made $1.8 billion on his foreign exchange bet against the dollar last year.

When confronted with complaints about the falling value of the dollar, the U.S. official is said to have responded to his European visitors: "The dollar is our currency, but it's your problem." That was in 1971.

Introduction

It certainly was a dramatic front page for the most recent issue of MacLean's Canada's weekly magazine (Canada's version of Time/Newsweek).

Seems like gold has probably bottomed relative to commodities

The fact that so many gold commentators are at present so "definite" about gold's impending rise has caused me to stop and think about the subject from base principles. This approach often serves to allow one to clear one's thinking.

In early morning trading the U.S dollar rallied in anticipation that Alan Greenspan's Congressional testimony would include an upbeat forecast for the U.S. economy and hope for a narrowing of its fiscal and trade imbalances.

Dear Mr. South:

Never in my twenty years of observing the markets have so many clear strong signals been presented for view. They cover the entire spectrum. They span the globe. They are worth a quick review. It will be difficult to maintain order in their flow.

A consensus is building among market observers that bonds defy all logic. The falling dollar should make dollar bonds fall, too. After all, bondholders stand to lose a large part of the value of their original investment as a result of the depreciating dollar.

Introduction

The P&F chart below - which gave an important "buy" signal this week - has been a priority object of my scrutiny for some months

Below is an extract from a commentary posted at www.speculative-investor.com on 5th February 2005.

After some tinkering around with time periods, the following daily bar chart of the ratio of $GOLD:$CRB started to reveal a couple of its underlying secrets.

Dear Mr. West:

The following article concludes that in the current economic environment, regardless of your predisposition as an investor (optimistic, pessimistic or neutral) the message of the charts is that a long term oriented investment in gold and/or gold shares will be

The violence of today's move in the gold shares has reminded me that there is too much technically based speculation (gambling) in the market place.

Platinum is often referred to as the 'noble metal'. Webster's definition of Noble is "high and great in character, showing greatness, outstanding or excellent, fine splendid, magnificent"

Now that the reality of the falling dollar has finally registered with the average American, and has been covered broadly by the media and has even been the subject of parody on Saturday Night Live, some individuals are raising the concept of a "inverse dollar

The title of this week's report is based on a famous quote by the Nobel Prize winning monetary economist Milton Friedman. His view, anchored in the quantity theory of money, is that excessive money creation spawns inflation.