GOLD... here we go?

Wednesday, December 17, 2008 | posted by RedApple
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Having been away for a few weeks in Asia. It is clear to me that there is a severe lack of trust between counterparties and growingly between countries. US Dollar, EURO ... people in China is simply asking what can "IT" gets me. Market is clearly still in risk reduction mode with low liquidity. Several players are taking bets on bailout plans, FED announcements, ECB, housing, economy... in such low liquidity holiday environment, we are not surprised to see sharp moves in the market. One interesting observation is that given the range of USD in the past 6 months and the extreme high volatility environment, most option books in the street are cleaned out for the year. That usually means that there are little price magnets to anchor the market. In other words, the market price level is anyone's game.

To a more positive news: FED went all in, China pumping a lot more stimulus. With most "stronger" countries moving towards "Quantitative easing" (aka print money) and "weaker" countries trying all their best to stem outflow of money, clearly there is no safe heaven and let alone reserve currency. It is time to accumulate what we need (ie oil, food, metals...etc) and GOLD.

We need to also acknowledge our bad calls. 1. With FED's QE, shorting treasury (because we question that long term viability of US) is too early. 2. no squeeze in Nov28 delivery of Gold.

A curve ball - if Obama manages to turn US focuses on Renewable Energy/Biotech or Stem Cell research, US can arguably create another "dot-com" like boom. Since US is strong in creativity and promoting entrepreneuralism, if we see that in within Obama's term, we may call to buy back US beacuse what the world needs next are better energy solution and better healthcare solution.

GOLD - 853
EURO - 1.4080
JPY - 88.47
CRUDE - 43.6
US10y - 2.165%

FED - 0-0.25%
BOC - 1.5%
ECB - 2.5%
BOE - 2%
SWB - 0.5%
RBA - 4.25%
CHINA - 5.58%

***** Update 28 Dec 2008 - for latest news and charting for Gold and Gold stocks, please check updates from our blog: Gold Boom Doom - Gold Related Blogs