Nomura's Longer-Term Perspective On Gold. While lately not much, if anything, has changed in our and the broader secular outlook on gold, which has been and continues to remain the only currency equivalent that isolates devaluation risk, and excludes counterparty risk while being an implicit bet on the stupidity of those in charge (the fact that various tenured "Ph.D. economists" hate what it represents for their tenure prospects of course only makes the bullish case far stronger). True, in the past month it has surged from $1520 to $1660 but only Ph.D. economists (indeed, that 200 DMA proved to be a complete non-event) could not have foreseen that year end liquidations in a desperate drive to shore up liquidity (as explained here) by institutions, always end, and the reversion to the above thesis sooner or later reappears.
From Nomura: A longer-term perspective on gold Gold has occupied a significant, yet constantly evolving place in the history of financial markets. Short-term volatility drivers. Gold vs Gold Stocks - Goldman Releases "2012: A Gold Odyssey? The Year Ahead..." (Yes, this is arguably the most gratuitous use of the word "gold" in a headline ever). As one can glean from the title, in this comprehensive report by Goldman's Paul Hissey, the appropriately named firm deconstructs the divergence between gold stocks and spot gold in recent years, a topic covered previously yet one which still generates much confusion among investor ranks.
As Goldman, which continues to be bullish on gold, says, "There is little doubt that gold stocks in general have suffered a derating; initially with the introduction of gold ETFs (free from operational risk), and more recently with the onset of global market insecurity through the second half of 2011. However, gold remains high in the top tier of our preferred commodities for 2012, simply because of the extremely uncertain macroeconomic outlook currently faced in many parts of the world. We feel there are some obvious solutions to the flight to physical gold ETFs. Investment View: And the chart that lays it all out: There Is No Joy In Muddlethroughville: World's Biggest Hedge Fund Is Bearish For 2012 Through 2028, And Is Long Gold. That Ray Dalio, famed head of the world's largest (and not one hit wonder unlike certain others) hedge fund has long been quite bearishly inclined has been no secret.
For anyone who missed Dalio's must see interview (and transcript) with Charlie Rose we urge you to read this: "Dalio: "There Are No More Tools In The Tool Kit. " For everyone who is too lazy to watch the whole thing, or read the transcript, the WSJ reminds us once again that going into 2012 Dalio's Bridgewater, which may as well rename itself Bearwater, has not changed its tune. In fact the CT hedge fund continues to see what we noted back in September is the greatest threat to the modern financial system: a debt overhang so large, at roughly $21 trillion, that one of 3 things will have to happen: a global debt restructuring/repudiation; global hyperinflation to inflate away this debt, or a one-time financial tax on all individuals amounting to roughly 30% of all wealth.
From the WSJ: Which means what? Did GLD And Other Gold ETFs Kill Gold Stocks? In a just released piece by Goldman's Eugene King which explains the firm's justification for why gold will peak at over $1900 in 2012, and which we will discuss in greater detail shortly, Goldman brings up a very interesting point, namely that the ongoing weakness in gold stocks, and the broad decoupling of gold miners from gold price can be attributed to one primary thing: the emergence of synthetic means of expressing a position on the gold market and "bypassing" direct gold cost pass thru exposure in the form of gold stocks.
From Goldman which notes one of the primary reasons for gold equity underperformance compared to the spot gold price: Increased ability to access physical gold: The introduction of ETFs, growth in the transport, storage and insurance industries to support secure warehousing, and development of a liquid, reliable options market meant that investors who previously had to buy equities to gain access to the underlying commodity could now just buy gold directly. Save 62% on Metals and Energy Producers. How Obama's Debt Reduction Plan Will Impoverish Millions of Americans and Cause the Greatest Transfer of Money in Modern History More money will change hands in this decade than at any time in the last 100 years. People who don't protect themselves risk losing everything to deceptive government policies, but those who take action now will be on the receiving end of a historic shift of wealth...
Keep reading to learn how to become one of the recipients... Dear Fellow Investor, The US government is working hard to resolve the national debt crisis... but not in ways you might think. Frankly, what they're doing should be outlawed. Obama and his cronies are trying to reduce all that debt – an unsustainable $14.84 trillion dollars– through fueling the number-one enemy of the economy: inflation. The result will be millions of Americans losing most of their hard-earned assets. No, our leaders would rather take what seems to be the easy way out. But it will cause more pain than you can imagine... U.S. INFOGRAPHIC: Everything You Need To Know About Gold. INFOGRAPHIC: Where Gold Comes From And Where It Goes. The Gold Triple Play – Volatility, Currencies and Europe | Frank Holmes. Resurgent investment lifted global gold demand 6 percent from the previous year to just over 1,000 tons during the third quarter of 2011, according to the latest Gold Demand Trends Report from the World Gold Council (WGC).
The potent cocktail of inflationary pressures in the emerging world and the European sovereign debt fiasco left investors searching for a safe haven—they looked for it in gold. In an uncertain era where many asset values are declining, gold has thrived. Gold prices averaged $1,700 an ounce during the third quarter of 2011, 39 percent higher than the same time last year and 13 percent above the previous quarter, according to the WGC.
In total, investment demand increased 33 percent on a year-over-year basis to reach the third-highest quarter of investment demand on record, says the WGC. The increase was broad in scope. Investment in gold bars and coins jumped 29 percent year-over-year while holdings in gold ETFs reached an all-time high. Currency Effect on Gold Prices.