Tuesday, December 8, 2009

Mr. Gold's Wild Ride

It 's been a wild and volatile ride for Gold over the last several days. In fact, the most followed index of Gold stocks (HUI), has suffered a peak to trough drop of more than 15% in the last four days!  As to the bullion itself, the drop has been a relatively meager 6.5%.

I wish to reiterate that my prior stated opinions regarding Gold and Silver have not changed one iota.  I continue to maintain that not only has this sharp correction been long overdue, but actually NECESSARY to re-energize a market that was threatening to run away.

My own personal guesstimate is that Gold is in a temporary lull of some sort and preparing for a new launch upward.  Obviously, I couldn't possibly predict as to how long this pattern will exist.   However, I remain convinced that this sharp break is nothing but a mere holding pattern from which we will shortly see a resumption of the upward trajectory.  And, with a level of vigor that we have yet to experience.

I can't guarantee any of this, since I'm far less wise than the market!  And, realizing this, it would be both irresponsible and unethical for me to claim otherwise.

As I've pointed out repeatedly, physical gold is in a position of extreme short supply.  So is Silver.  I believe that there will come a day that this will be obvious. I, furthermore, maintain that BOTH Gold and Silver will be caught in what's known as a "short squeeze".

A "short squeeze" refers to a situation in which the seller is required to deliver, but cannot meet the delivery as a result of a shortage in their supply.  For example, there are thousands of cases where shares are "sold short" and the sellers are incapable, or unwilling, to part with them.  As a result, a veritable buying panic ensues as the short sellers are required to produce the "short sold" item within a very narrow window of time. This is a matter of law!

There exists a very HIGH level of short position in Gold, Silver and related mining stocks.  The beauty of this, is that the bulk of these positions are now "under water" and must be honored. This means that a HUGE number of buyers will be FORCED to buy.

All of this points unequivicolly to one conclusion:  Gold and Silver are destined to go much, much higher and very soon.  All I can do is point out this extraordinary situation that I know exists and suggest that you act accordingly.  In my opinion, those that act on this information NOW will be granted a once-in-a-lifetime opportunity.

In my most humblest of opinions, I pray that you consider my advice.
Your faithful servant.

Marko's Take

2 comments:

  1. Hi, Marko,

    As an addition to my continuing conundrum in regards to the value of gold, I thought you and your readers might find the following interesting. I got this from http://www.onlygold.com/tutorialpages/historyfs.htm...

    "Jason and the Argonauts sought the Golden Fleece around 1200 B.C.

    That Greek myth makes more sense when you realize that the fleece that it refers to is the sheep's fleece used in the recovery of fine placer gold.


    Early miners would use water power to propel gold-bearing sand over the hide of a sheep, which would trap the tiny, but heavy, flakes of gold. When the fleece had absorbed all it could hold, this 'golden fleece' was hung up to dry, and when dry would be beaten gently so that the gold would fall off and be recovered.

    This primitive form of hydraulic mining began thousands of years ago, and was still being used by some miners as recently as the California gold rush of 1849."

    I also read, which I'm still trying to find the article again (as I foolishly didn't bookmark it!!!) that prior to Gold becoming a form of 'exchange', barley was used as a currency of for trade. WELL... my point exactly from my prior posted response to you... You see... barley makes more sense than gold. AT LEAST you can EAT IT!!! And, by the way, eating a cup or two of cooked barley a day for at least two weeks will have you talking to God as you sit down for your daily visit to the 'terlit' thanking Him for this invention. :0)

    Peter

    Peter

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  2. Hey "Peter Peter"

    As long as we're discussing trivia it was Archie and Edith Bunker that first brought the use of "terlit" to my attention.

    As to the original part of your comment regarding the history of gold, that was utterly fascinating and I'm sure readers will appreciate as much as I did!

    M

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