logo  
Sign in or Register

Already a member?

Sign in

Or sign in with your account on:

Not a member yet?

Register
    

Testing the Patience of Goldbugs

  +Follow January 8, 2014 5:23PM
Share:
Tickers Mentioned:

It's been one of the worst years for gold in a generation. A flood of outflows from gold ETFs, endless tax increases on gold imports in India, and the mirage (albeit a convincing one in the eyes of many) of a supposedly improving economy in the US have all contributed to the constant hammering gold took in 2013.

Perhaps worse has been the onslaught of negative press our favorite metal has suffered. It's felt overwhelming at times and has pushed even some die-hard goldbugs to question their beliefs… not a bad thing, by the way.

To me, a lot of it felt like piling on, especially as the negative rhetoric ratcheted up. Last year's winner was probably Goldman Sachs, calling gold a "slam-dunk sale" for 2014 (this, of course, after it's already fallen by nearly a third over a period of more than two and a half years—how daring they are).

This is why it's important to balance the one-sided message typically heard in the mainstream media with other views. Here are some of those contrarian voices, all of which have put their money where their mouth is…

  • Marc Faber is quick to stand up to the gold bears. "We have a lot of bearish sentiment, [and] a lot of bearish commentaries about gold, but the fact is that some countries are actually accumulating gold, notably China. They will buy this year at a rate of something like 2,600 tons, which is more than the annual production of gold. So I think that prices are probably in the process of bottoming out here, and that we will see again higher prices in the future."
  • Brent Johnson, CEO of Santiago Capital, told CNBC viewers to "buy gold if they believe in math… Longer term, I think gold goes to $5,000 over a number of years. If they continue to print money at the current rate, I think it could be multiples of that. I see a slow steady rise punctuated with some sharp upward moves."
  • Jim Rogers, billionaire and cofounder of the Soros Quantum Fund, publicly stated in November that he has never sold any gold and can't imagine ever selling gold in his life because he sees it as an insurance policy. "With all this staggering amount of currency debasement, gold has got to be a good place to be down the road once we get through this correction."
  • George Soros seems to be getting back into the gold miners: he recently acquired a substantial stake in the large-cap Market Vectors Gold Miners ETF (GDX) and kept his calls on Barrick Gold (ABX).
  • Don Coxe, a highly respected global commodities strategist, says we can expect gold to rise with an improving economy, the opposite of what many in the mainstream expect. "You need gold for insurance, but this time the payoff will come when the economy improves. In the past when everything was falling all around you, commodity prices were soaring out of sight. We had three recessions in the 1970s and gold went from $35 an ounce to $850. But this time, gold is going to appreciate when we start getting 3% GDP growth."
  • Jeffrey Gundlach, bond guru and not historically known for being a big fan of gold, came out with a candid endorsement of the yellow metal: "Now, I kind of like gold. It's definitely very non-correlated to other assets you may have in your portfolio, and it does seem sort of cheap. I also like the GDX."
  • Steve Forbes, publishing magnate and chief executive officer of Forbes magazine, publicly predicted an impending return to the gold standard in a speech in Las Vegas. "A new gold standard is crucial. The disasters that the Federal Reserve and other central banks are inflicting on us with their funny-money policies are enormous and underappreciated."
  • Rob McEwen, CEO of McEwen Mining and founder of Goldcorp, reiterated his bullish call for gold to someday top $5,000. "We now have governments willing to seize their citizens' assets. We now have currency controls on the table, which we haven't seen since the late 1960s/early '70s. We have continued debasement of currencies. And the economies of the Western world remain stagnant despite enormous monetary stimulation. All these facts to me are bullish for gold and make me believe the price will bounce back relatively soon."
  • Doug Casey says that while gold is not the giveaway it was at $250 back in 2001, it is nonetheless a bargain at current prices. "I've been buying gold for years and I continue to buy it because it is the way you save. I'm very happy to be able to buy gold at this price. All the so-called quantitative easing—money printing—by governments around the world has created a glut of freshly printed money. This glut has yet to work its way through the global economic system. As it does, it will create a bubble in gold and a super-bubble in gold stocks."

And then there's the people who should know most about how sound the world's various types of paper money are: central banks. As a group, they have added tonnes of bullion to their reserves last year…

  • Turkey added 13 tonnes (417,959 troy ounces) of gold in November 2013. Overall, it has added 143.6 tonnes (4,616,847 troy ounces) so far this year, up 22.5% from a year ago, in part thanks to the adoption of a new policy to accept gold in its reserve requirements from commercial banks.
  • Russia bought 19.1 tonnes (614,079 troy ounces) in July and August alone. With the year-to-date addition of 57.37 tonnes—second only to Turkey—Russia's gold reserves now total 1,015 tonnes. It now holds the eighth-largest national stash in the world.
  • South Korea added a whopping 20 tonnes (643,014 troy ounces) of gold in February, and now carries 23.7% more gold on its balance sheet than at the end of 2012."Gold is a real safe asset that can help (us) respond to tail risks from global financial situations effectively and boosts the reliability of our foreign reserves holdings," said central bank officials.
  • Kazakhstan has been buying gold every month, at an average of 2.4 tonnes (77,161 troy ounces) through October. As a result, the country's reserves have seen a 21% increase to 139.5 tonnes from a year ago.
  • Azerbaijan has taken advantage of a slump in gold prices and has gone from having virtually no gold to 16 tonnes (514,411 ounces).
  • Sri Lanka and Ukraine added 5.5 (176,829 troy ounces) and 6.22 tonnes (199,977 troy ounces) respectively over the past year.
  • China, of course, is the 800-pound gorilla that mainstream analysts seem determined to ignore. Though nothing official has been announced by China's central bank, the chart below provides some perspective into the country's consumer buying habits.

China ended 2013 officially as the largest gold consumer in the world. Chinese sentiment towards gold is well echoed in a statement made by Liu Zhongbo of the Agricultural Bank of China: "Because gold has capabilities to absorb external economic shocks, growth of its use in the international monetary system will be imminent."

And those commercial banks that have been verbally slamming gold—it turns out many are not as negative as it might seem…

  • Goldman Sachs proved itself to be one of the biggest hypocrites: while advising clients to sell gold and buy Treasuries in Q2 2013, it bought a stunning (and record) 3.7 million shares of GLD. And when Venezuela decided to raise cash by pawning its gold, guess who jumped in to handle the transaction? Yes, they claim the price will fall this year, but with such a slippery track record, it's important to watch what they do and not what they say.
  • Société Générale Strategist Albert Edwards says gold will top $10,000 per ounce (with the S&P 500 Index tumbling to 450 and Treasuries yielding less than 1%).
  • JPMorgan Chase went on record in August recommending clients "position for a short-term bounce in gold." Gold's price resistance to Paulson & Co. cutting its gold exposure, along with growing physical gold demand in Asia, were cited among the main reasons.
  • ScotiaMocatta's Sunil Kashyap said that despite the selloff, there's still significant physical demand for gold, especially from India and China, which "supports prices."
  • Commerzbank calls for the gold price to enter a boom period this year. Based on investment demand from Asian countries—China and India in particular—the bank predicted the yellow metal will rise to $1,400 by the end of 2014.
  • Bank of America Merrill Lynch, in spite of lower price forecasts for gold this year, reiterated they remain "longer-term bulls."
  • Citibank's top technical analyst Tom Fitzpatrick stated gold could head to $3,500. "We believe we are back into that track where gold is the hard currency of choice, and we expect for this trend to accelerate going forward."

None of these parties thinks the gold bull market is over. What they care about is safety in this uncertain environment, as well as what they see as enormous potential upside.

In the end, the much ridiculed goldbugs will have had the last laugh.

We can speculate about when the next uptrend in gold will set in, but the action for today is to take advantage of price weakness. Learn about the best gold producers to invest in—now at bargain-basement prices. Try BIG GOLD for 3 months, risk-free, with 100% money-back guarantee. Click here to get started.

By Laurynas Vegys, Research Analyst

Casey Research

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


Signup for our daily newsletter and get our best articles emailed right to you!

Results for gdx
Scott Smith
5 Mar 15 03:50:40
$DUST Anything can happen but probability tells me EXPECT higher. Chart recently posted http://t.co/FOXkyfwX8d $GDX $GLD $NUGT $JNUG $STUDY
Rosner Stocks
5 Mar 15 03:39:16
$ADP Short Sales Updated Thursday, March 5, 2015 05:59:22 AM $GDX $INTC $FEYE $SLW http://t.co/4ccPLvl12f
IH News Desk
5 Mar 15 02:36:39
$GDX Reviews Updated Thursday, March 5, 2015 05:11:04 AM $GLD $LL $LUV $AAPL http://t.co/1h1P7ubXDq
Sufiy
5 Mar 15 02:25:47
#Gold: Trend Of Higher Lows And Higher Highs - China Cuts Interest Rates. http://t.co/Y0e7JfvPDQ $GLD $GDX $GDXJ $TRRXF $MUX $CU
Stockaholics
5 Mar 15 02:03:30
400% Gains On Our Stock Picks & a MASSIVE New Pick Coming today! Check it out: http://t.co/IL8yCE0CRE $MDMT $COHO $GDX
Rosner Stocks
5 Mar 15 01:36:46
$CA Stock Message Board Updated Thursday, March 5, 2015 03:59:23 AM $SDRL $GDX $BND $UA http://t.co/FHhuiENixw
IH News Desk
5 Mar 15 01:35:09
$XLP Investor Opinions Updated Thursday, March 5, 2015 04:11:05 AM $GE $ABX $GDX $AAPL http://t.co/KuvKq2n0Cb
Stockaholics
5 Mar 15 00:48:45
400% Gains On Our Stock Picks & a MASSIVE New Pick Coming today! Check it out: http://t.co/IL8yCE0CRE $PZG $APOG $GDX
Rosner Stocks
5 Mar 15 00:36:23
$XLU Stock Price Updated Thursday, March 5, 2015 02:59:23 AM $GGAL $GDX $GE $BIB http://t.co/GUsXD90FZp
HotKeyTrading
4 Mar 15 23:30:09
Unusual Options Activity: Puts: $HUN $EFA $WFC $IWM $GE $EEM $JPM $GM $FXI $UVXY $AA $VNET $TGT $GDX $CMCSA http://t.co/Vv2VEn80mr #dow
PolgarStocks
4 Mar 15 23:28:21
$SMN Stock Message Board Updated Thursday, March 5, 2015 02:07:11 AM $TQQQ $GDX $WMIH $MU http://t.co/z8Ki1fX25G
Rosner Stocks
4 Mar 15 22:33:25
$GDX Percent Change Updated Thursday, March 5, 2015 00:59:22 AM $HYG $UNH $AXP $PG http://t.co/BsWhjN3NRq
IH News Desk
4 Mar 15 22:30:35
$BLTA Filings Updated Thursday, March 5, 2015 01:11:06 AM $UA $NUGT $RIG $GDX http://t.co/2brBHy2SrD
Bradley
4 Mar 15 21:48:10
Find your own trading path. $MAT $TSM $IWM $PFE $GOOG $AAPL $DRC $LVS $CL $WTW $APC $GDX http://t.co/l9JkTCtpHR http://t.co/V56GJVujNV
Stock Rocket
4 Mar 15 21:23:53
Our Stock Picks Gained 400% In 5 Weeks & Our New Pick Is Coming Tomorrow! Get It Early: http://t.co/iCLDxkVSvn $PZG $APOG $GDX
PolgarStocks
4 Mar 15 20:25:11
$CY Recent News Updated Wednesday, March 4, 2015 11:07:09 PM $SCTY $NFLX $FITX $GDX http://t.co/1kVGecPJvG
Sam
4 Mar 15 19:57:17
One more before bed! Love ya'll! $MAT $TSM $IWM $PFE $DRC $LVS $CL $WTW $APC $GDX http://t.co/YU579z0Ece http://t.co/bcEPYq5uaq
Langan Stocks
4 Mar 15 19:27:23
$GDX Filings Updated Wednesday, March 4, 2015 10:03:16 PM $FCX $LL $CFP $ALXN http://t.co/xvsRuIINWy
Warren Puffett
4 Mar 15 19:16:27
$NUGT new gold high of the day. $gdx $GDXJ $GC_F $GLD
Market Masta
4 Mar 15 19:11:15
Gold Spot Daily $GLD $GDX $GDXJ $SLV http://t.co/QehLDZQuCJ
The American
4 Mar 15 18:55:19
Could Apple Buy a Third of the World’s $GOLD ? via @sharethis $PHYS $GLD $SLV $SIL $GDX $GDXJ $NUGT $DUST $GLDX $JNUG $JDST $CYB $FXI $AAPL
Robert Desmond
4 Mar 15 18:55:01
{video} Chart Analysis $NYSE $FXE $USD $SRS $PLUG $ALTR $ROSG $PRKR $SOL $ITKG $DUST $GDX $WBA http://t.co/9fxKO2zvuz
The American
4 Mar 15 18:44:45
Mind-Blowing: China Consumes More $GOLD Than the World Produces @USFunds $FXP $FXI $YINN $YANG $PHYS $GLD $GDX $GDXJ $NUGT $DUST $JNUG $JDST
Ben Silverberg
4 Mar 15 18:42:49
Leading market sector lower Wed included: $XLF $IYR $XLU $XLP $XLY $RSX $EEM $GDX
SmallCaps
4 Mar 15 18:39:10
http://t.co/O5akYXpMLF <-- This millionaire trader changed my life! $CYBR $CY $INTC $GDX $TTPH #stocks #trading
Derek'SKI'
4 Mar 15 18:33:53
RT @WarrenPuffett9: $NUGT just like that. Gold over 1203. $JNUG $GDX $GC_F $GLD
Warren Puffett
4 Mar 15 17:39:55
$NUGT just like that. Gold over 1203. $JNUG $GDX $GC_F $GLD
Stock Rocket
4 Mar 15 17:37:44
Our Stock Picks Gained 400% In 5 Weeks & Our New Pick Is Coming Tomorrow! Get It Early: http://t.co/iCLDxkVSvn $MDMT $COHO $GDX
Venky Srinivasan
4 Mar 15 17:22:01
"@chessNwine: NEW POST: Stock Market Recap 03/04/15 {Video} http://t.co/r8jyVdQBoU $AAPL $BABA $GDX $SPY $UWTI"
royfberger
4 Mar 15 17:21:11
Unreal SKY tonight $MAT $TSM $IWM $PFE $DRC $LVS $CL $WTW $APC $GDX http://t.co/JUFJoVvAWo http://t.co/qmenSLs39j
Warren Puffett
4 Mar 15 16:52:08
Commented on StockTwits: $GDX $GDXJ $NUGT $GLD Looking for gold to retest 126-1280 near term imo. 1200 is holding... http://t.co/RLTdx2xw5d
Warren Puffett
4 Mar 15 16:48:29
$nugt $GC_F $GDX looks like gold is trying to get back up.. 1202 here
$teph
4 Mar 15 16:33:29
RT @ManciniResearch: After hours trading summary and poker http://t.co/veoih8uRSr #trading #financialnews #investing #gold #money #stocks …
Rosner Stocks
4 Mar 15 16:27:21
$IBB Investor Opinions Updated Wednesday, March 4, 2015 6:59:24 PM $GDX $XLU $ADSK $BBY http://t.co/8cvt87rcgN
Mancini Research
4 Mar 15 16:25:50
After hours trading summary and poker http://t.co/veoih8uRSr #trading #financialnews #investing #gold #money #stocks $GLD $GDX $NUGT $GDXJ
Mark Freeman
4 Mar 15 16:04:50
$GLD update: $GDX $GDXJ $NUGT $GLD Looking for gold to retest 126-1280 near term imo. 1200 is holding up very well as of late. http://zp
Top ETF Funds
4 Mar 15 15:56:54
Gold threatens to break down.. http://t.co/tNSvYeYC4a $GDX #ETF #ETFs #Stocks
Liam Garrity-Rokous
4 Mar 15 15:34:53
A condensed version of my prediction for $GDX's future price action, over the next few weeks, can now be found... http://t.co/DytitNqsHa
PolgarStocks
4 Mar 15 15:18:17
$TWTR News Updated Wednesday, March 4, 2015 6:07:16 PM $ANY $GDX $DDD $XLV http://t.co/6IKUTD45TM
Liam Garrity-Rokous
4 Mar 15 14:43:33
My prediction for $GDX's price action over the next few weeks can be found on my website: http://t.co/mGNSo4N1Qn http://t.co/vtMrIFqiZk
My3Sons
4 Mar 15 14:39:49
RT @chessNwine: NEW POST: Stock Market Recap 03/04/15 {Video} http://t.co/ZAm2eUJZoK $AAPL $BABA $GDX $SPY $UWTI
Liam Garrity-Rokous
4 Mar 15 14:37:39
Follow-up To Daily Technical Observation (on 3/4/15): If investors begin to sell $GDX is large volume, or more... http://t.co/5S5bXwgmPx
Liam Garrity-Rokous
4 Mar 15 14:37:39
Follow-up To Daily Technical Observation (on 3/4/15): Given the bearish nature of $GDX's current price action,... http://t.co/wvr30zcCrz
Liam Garrity-Rokous
4 Mar 15 14:37:39
Daily Technical Observation (on 3/4/15): On February 26th, I posted two versions of a chart of $GDX that showe... http://t.co/yQQxj13yMM
Edward Gofsky
4 Mar 15 14:21:45
RT @chessNwine: NEW POST: Stock Market Recap 03/04/15 {Video} http://t.co/ZAm2eUJZoK $AAPL $BABA $GDX $SPY $UWTI
Stuart A. Brown
4 Mar 15 14:16:33
"@chessNwine: NEW POST: Stock Market Recap 03/04/15 {Video} http://t.co/OoSX0RBx9V $AAPL $BABA $GDX $SPY $UWTI"
Dawn Rinaldi
4 Mar 15 14:06:10
$GDX closed short $DUST 15.57 never really got signal slow lo vol melt. looks like wants 19.50 61 fib/dly bb-at least-R:R eh will day trade
SmallCaps
4 Mar 15 13:59:49
http://t.co/O5akYXpMLF <-- This millionaire trader changed my life! $CYBR $CY $INTC $GDX $TTPH #stocks #trading
busterstacks
4 Mar 15 13:51:18
RT @chessNwine: NEW POST: Stock Market Recap 03/04/15 {Video} http://t.co/ZAm2eUJZoK $AAPL $BABA $GDX $SPY $UWTI
Marco Di Dionisio
4 Mar 15 13:42:35
$GDX update! Bulls managed to hold on today but this looks heavy to me. Important moment here, watch next few days http://t.co/MsyUncb6Nn
				
				
  +Follow January 8, 2014 5:23PM
Share:

Comments

 

blog comments powered by Disqus

About us

Equities.com is the most advanced interactive online social ecosystem for the financial industry, serving as a resource center and next-generation communication platform that connects self-directed investors with public issuers, market experts, and professional service providers and vendors. Registered members can leverage our exclusive proprietary research tools such as the Small-Cap Stars, which outperformed 90% of all small-cap mutual funds, and robust do-it-yourself E.V.A. research reports. The Equities.com Issuer Dashboard is the ideal tool to communicate and manage investor awareness campaigns to the investment community, as well as to access valuable resources to help your company grow.

Market Data powered by QuoteMedia.
Copyright © QuoteMedia. Data delayed 15 minutes unless otherwise indicated. Terms of Use.