My gold guru, whom I'll be visiting in Vancouver starting tomorrow,(look for daily reports on what the Canadian mining entrepreneurs are thinking) is furious there hasn't been a major correction in gold so he can repurchase some of the shiny stuff he sold at $1600 an ounce-- after riding it up from $250 an ounce in the early part of last decade.
Just on August 2nd the South Korean central bank reported its first major purchase of gold (25 tons) in 13 years-- tripling its position. "The gold purchase, as a safety net, will help, mus cope with volatile global financial markets and enhance investor confidence in Korea in times of crises," said Hong Taeg-Ki, head of the bank's reserve management.
Better late than never, just on the cusp of the orderly beginning of a steady but amazing daily action in gold. Smarter and luckier were India, China, Russia, Thailand, Mexico, Saudi Arabia, as well as Norway, Sri Lanka, Mauritious and even Greece. Joining and growing t he finest secular bull market in nany market, gold has risen from $850 an ounce in June, 2008 when I first visited my guru in Vancouver to almost $1900 an ounce, within sniffing distance of 2000. That's a good deal better than a double in a tad over 3 years. Woulda, shoulda, coulda!
Is this the bubble already-- or is the manic phase aherad of us? Nobody can say for sure. But, waiting for it are the likes of John Paulson,
sundr other hedge funders, a growing band of family investment offices, investment advisers, endowments like Texas and others-- even the chief economidst of Deutsche Bank, who admitted on Bloomberg Television that his personal 401k was 100% in gold. Thast should make me nervous, but it doesnt.
Of course, the chart on golkd resembles the chart of other bubblers like the tech/NASDAQ buble of 1999, when the index was up 9 times in bloody decade. Hmmm! Gold was $200-$250 in 2002 and is apoproaching $200 an ounce-- the same 9 times. We must be on the verge of a major correction.
Except for one thing. As the exceptionally fine analkysis of The High-Tech Strategist tells it, gold is very underowned among financial institutions and is being seen as a substitute for paper money, the dollar and the euro come to mind. It is being treated as a more stable reserve currency by central banks who wish to hedge their mountain of dollar obligations.
Then,too, in China, it is in the fever of a bull market for retail investors, who have been accumulatinmg gold at a record pace-- in effect following the lead of the People's Bank of China, which also keeps buying gold and bragging about it. "Eventually. the big-money institutional investors will be forced into gold," predicts the High Tech Strategist.
Even some gold stocks-- which have been lagging bullion-- are starting to move ETF Newmont Mining and GDX, the gold ETF as compulsion NOT to miss the mania stage is gaining momentum. For The High Tech Strategist, however, who suffered tghrough the high-tech meltdown just as gold was girding its loins-- he reckons its time to get in at the bottom of the tech cycle just as gold might start to roll over. More on golkd later this week.
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