Thursday, October 16, 2008

Gold Old Yellered (Part 2)

Gold ends slightly lower amid market uncertainty

"People currently seem to prefer to sit on cash," said Jon Nadler, senior analyst at Kitco Bullion Dealers. "Another reason [gold isn't rising] is that investors are scrambling to meet margin calls," thus they have to sell even their gold investment.

When I listen to the deflationist camp I tend to nod in agreement. They've been accurately predicting bubbles and their crashes for nearly a decade. First it was the dotcom bubble and then there was the housing/credit bubble.

Deflation seems a perfectly good reason to sell gold.

Some analysts, however, said it's only a matter of time before gold rises.
"An extraordinary amount of liquidity has been pumped into the system this year," said Peter Grant, senior analyst at USAGOLD. "I anticipate further debasement of all currencies, including the dollar, which will ultimately drive gold prices higher."

When I listen to the inflationist camp I also tend to nod in agreement. They did accurately predict what an extraordinary amount of liquidity could do in the dotcom bubble's aftermath. They are now predicting what an extraordinary amount of liquidity could do in the housing/credit bubble's aftermath.

Inflation seems a perfectly good reason to buy gold.

Is it any wonder I'm seemingly stuck between the two camps, in some sort of twisted paper stagflationist long-term middleground neverending nightmare? It has been four full years since I turned bearish. Not only do I not see the light at the end of the tunnel, I can't even see the frickin' tunnel. I think we might have sold it to the Chinese, not that it is helping their economy right now, lol.

Gallows humor for the win (or lack thereof).

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