Is Gold into a seasonal pullback or is it something worse?
Are any real, objective reasons to believe that the US economy is in recovery as mentioned by Ben Bernanke?
Let’s see some facts, courtesy of USDebtClock.org.
US Population: 308,112,749
US National Debt: over 12 trillion
Official Unemployment: 15,403,107
Actual Unemployment: 26,467,659
Food Stamps Recipients: 37,887,326
Foreclosures: 782,592
Over the past days, gold was in pullback. Healthy, as considered by various stock market gurus, scary as considered by me. Having invested in gold mining companies, the pullback was anything but a warm feeling. The question is: are we going to see a Christmas rally in gold price?
The gold bears are cheering now, but for how long?
On December 2, 2009, a key figure at the People’s Bank of China made the following remark:
“We must keep in mind the long-term effects when considering what to use as our reserves,” Hu Xiaolian, a vice-governor at the People’s Bank of China, told reporters in Taipei, when asked if China had plans to increase its gold holding in its foreign exchange reserves.
“We must watch out for bubbles forming on certain assets, and be careful in those areas.”
Interesting enough, before the Chinese talked about gold being in a bubble on December 2nd, they were talking about needing to buy more. But naturally, why would they be eager to buy at such a high price when India purchased 200 tons of IMF gold and paid only $1,045/oz. for it.
Immediately after that, the price has skyrocketed to $1,227/oz. It’s pretty clear that speculation has pushed prices up after the Indian purchase and as clear it is that the Chinese will wait for a correction before they buy, and if the correction does not happen naturally, a ‘bubble gold’ announce may do the trick. The lemmings with weak hands are jumping off the cliff, and the Chinese are getting the supply they need to buy 6000 tons of gold cheaper.
Between Chinese ‘gold bubble’ comment and Bernanke’s comment that the U.S. economy faces “formidable headwinds,”, gold has nothing else to go but down.
Let’s hope that after the weak hands were dealt with, the strong ones are going to push the gold up once again.