gold/resistance/world markets

  1. 13,265 Posts.
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    Seems to me its reached a very interesting time for gold.Will it drive down through the current resistance or continue its uptrend.We have come to the moment of recconing as far as what the markets believe and what is reality.It looks to me as though the selling is loosing momentum and maybe gold is about to resume its trend back up.There are still too many negatives to a pickup in the world economy,a rise in the $US,and a consequent fall in the POG.

    We still have a property bubble in the US and Aust

    We still have large credit debt(US and Aust) as well as US national debt.

    US companies are still issuing profit warnings

    US rates are still coming down.

    So why are the US markets rallying?It makes no sense that the US markets would rally substantially if there were littl/ no potential returns for investors.But is this so?
    Just have a think about this one for a minute.The big money is constantly chasing returns.First it chased equities coming up to 2000.When these no longer gave returns, it chased property,where some has remained because private investors have no where else to go(they have little or no confidence in equities and lack the skills to work the bond markets).Recently the bond markets had a workout.And now it appears its time for the hot potatoe to be passed back to equities(at least for the big money(funds))for the moment.

    I have posted previously that the smart money,Souros and company,have recently put quite a bit into gold.I would be interested to know if they have sold down on their positions,if anyone has that info.If not then its confirmation to me that they also lack faith in this current bull run/rally?

    My previous post on this subject maintained that there was manipulation occuring in the US markets.Well,I take it back,to be honest I dont think its possible either.What I do think is possible is that the professional investment community is chasing diminishing returns by necessity and hoping that this will result in a soft landing for the markets.Its the only play left to the US fed and the world economy.Trouble is what happens if/when the US fed has to go further down with the rates to stimulate the economy.What happens when the $US is worthless(0%)in terms of investment.Who invests in a currency that gives zero returns.

    As I said,things have reached a threshold point.There are 3 scenarios as I see it.

    1)The current bull run is for real.Question Ive got here is can those that have pushed this current run justify their investments in possible profits.Where are those profits coming from if the companies are issuing profit warnings.But then I suppose little or no return is better than negative?

    2)The bull run is in fact a rally in a declining market.With the current questions overhanging the US/Euro economies,a much more likely scenario perhaps.Why are we seeing the current rally?Perhaps its just another knee jerk reaction to chase those diminishing returns.They have little or no choice.

    3)We will see a major correction.If the US markets continue their delusional move up then this is a distinct possibilty(assuming it is delusional of course).If the profit warnings continue and companies dont perform then markets will move back down.

    Its all about as soft a landing as possible.My worry is if you want to have a soft landing why fly the plane higher.I wouldve thought the higher you go the worse will be the crash,so to speak.

    Of course this is all provided the bull run isnt real.
 
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