I'm reading articles by Jeff Clark who is readying his subscribers to short gold, expecting as much as a $100 pullback in the immediate term. More of the same from Dennis Gartman. Neither is long-term bearish, merely claiming that, based on sentiment and technicals, gold and gold stocks are severely overbought, and it's time to pull some off the table. I think they are wrong, based upon a paradigm shift of mindset that excess liquidity of money is forcing upon us. There's a new metric with which to measure the markets, and under other circumstances they might be right. But we're not witnessing stable markets measured with an unchanging fiat yardstick... we're watching the Titanic sink as it is flooded with quantitatively eased liquidity. It's like saying "look how fast the liner has sunk so far! It's never sunk this far this fast before... it's overdue to bob back to the surface!" While the fears of those watching silver and gold climb "the wall of worry" may provide some temporary bouyancy to the sinking ship (ie a short-term pullback), longer term the Titanic (once the reserve currency of the world) will continue to submerge, causing an inverse valuation of precious metals to rise... and only suicidal fools with a deathwish will choose drowning (in liquidity) over fleeing for the Ship's lifeboats... Silver and Gold. Gold, btw... is nearly full, but Silver is just getting started, and those with an early seat shall gain the best view.
Posted: Tue Oct 05, 2010 11:05 am