Gold news

I'm the paranoid sort, so if I said that the government would do its best to tax gold into possession or outright confiscate it, one would be excused in brushing it off. But if HSBC's top metals guy says it, one should probably pay more attention.
Speaking at the FT Silver conference in London yesterday, lead-off speaker John Levin, HSBC Bank's Managing Director, Global Metals and Trading (HSBC is one of the world's top precious metals traders and its vaults in the U.S. and Europe hold huge holdings of gold and silver bullion) recounted conversations with some of the U.S.'s top asset managers controlling massive amounts of capital asking if HSBC had the capacity in its vaults to store major gold purchases. On being told that the bank's U.S. vaults had sufficient space available he was told that they did not want their gold stored in the U.S.A. but preferably in Europe because they feared that at some stage the U.S. Administration might follow the path set by Franklin D. Roosevelt in 1933 and confiscate all U.S. gold holdings as part of the country's strategy in dealing with the nation's economic problems.
In other news, the GDX, an ETF that tracks a basket of gold mining stocks, has greatly outperformed the major indices over the last month. Click for a larger picture.

My most recent thoughts on the market involved the major indices rallying into a final rally and then entering a cyclical bear market which would take them to at least their March 2009 lows over the next 12-18 months. I thought gold, and hence, gold stocks, would follow the market down. My plan was to invest heavily in physical gold and gold miners at that time. Now, I'm no longer sure. The GDX outperformance might be a sign that some sort of decoupling between the broader market and gold is taking place. I fear I have too little exposure to gold, having bought a small amount of bullion at around $1200. I'm thinking about using a very small amount of my portfolio to buy far out-of-the-money LEAPs on GDX. Lots of risk, lots of leverage, and small total amount wagered. Share this

its a new world out there so be careful

There has never been a time when medium of exchange was electronic transfer. "Money" is no longer a store of wealth but functions as an IOU for goods and services. The gold sellers have been predicting runaway inflation for 50 years. There has been close to zero inflation in terms of work hours since WW2. Money inflation is mostly important to our owners, not to the working class.