Smart Money Moving To Gold

First, let me apologize for not writing during the last two weeks, but other duties called and I tend to look away when the gold price is going down because it irritates the heck out of me when gold does not act as the safe haven that it should be during times of monetary chaos. There are just times when you have to get away from the market or you will do something stupid, like selling when the big guns want you to. Nothing has changed as far as where gold should be heading, meaning up, with the exception of the incredible buying opportunities that have been afforded to us during the last two weeks.

Friday, June 1st was an indication of what is to come because gold is coming closer and closer to the breakout that will propel it towards $2,000 per ounce, plus. Let’s face it, nothing is getting better with the U.S. economy despite what the “Community Organizer In Chief” says. “It’s George Bush’s fault” can only last so long. The “Cry Baby President” is really showing how little his Marxist mentors prepared him for taking over the “Greatest Nation” the world has ever known.

America is better than his Marxist vision, which provides no hope and massive socialist change. Whatever happened to the buck stopped here? I guess after 70 plus years of government education,  there are very few people left that understand that America is a “Representative Republic” and not a “democracy”, (little “d” intended because democracies are doomed to failure because nations of sheep breed governments of wolves!) such as the nations of the Middle East, of which Egypt and Syria come to mind.

Let’s look at some of the events of the world that definitely indicate that what the media is feeding us is bull excrement. The dollar is strong today because the Euro is near collapse. Isn’t it ironic that the U.S. is in worse fiscal shape today due to the profligate spending of the current President who has racked up more debt than all of his predecessors combined? When the spot lite of debt shifts to the really big problem of U.S. debt, the dollar is going to fall well below .62, which is exactly what the Feds want, so that they can monetize their debt obligation on the backs of the American people.

Fitch Warns The U.S.

Here are some of the things that have occurred recently, that the state controlled media do not want you to become aware of.  Fitch, one of the major ratings agencies, warned the U.S. on June 7th, that they will lower the U.S.’s AAA rating unless the government takes major steps to reign in its ever expanding financial debt. For those of you that have not been concerned about the U.S. debt problem, you may have forgotten that S&P lowered the U.S. AAA rating last summer and Egan-Jones Ratings, EJR, cut the U.S. rating twice this year. These down grades mark another first for the “Community Organizer in Chief”, as he takes the crown for being the first president to suffer a downgrade in the U.S.’s credit rating.

Can Gold Ignore These Facts For Long?

(Reuters) – Hong Kong shipped 101,768 kilograms of gold to mainland China in April, up 62 percent on the month and marking the second-highest monthly exports, the Hong Kong Census and Statistics Department said on Monday. 

The total gross imports for the month of April were 103 tons. What is more amazing is the increase of gold imports from Hong Kong that were exported to China over the last 2 years. Between May 2010 and April 2011, China imported a net 66 tonnes of physical gold from Hong Kong. That number increased to 489 tons between between May 2011 and April 2012, which is an increase of 640%! Maybe China who, indecently owns most of our debt, knows what is coming to a theater near you.

What Do The Central Banks Know?

April 2012, saw Central Banks from around the world purchase over 70 tons of gold. IMF data, if you can believe them, indicated that developing nations, such as Turkey, the Philippines and Mexico  were major buyers of gold on recent prices dips. What is it that central banks around the world know that they are trying to keep from the public by manipulating the price of gold? They are net buyers these days on every dip in the price of gold.  Does that set of alarm bells in your head? It should. Are they trying to protect against the devaluation of currencies that is certain to come? I think so!

What Are The Gold ETFs Doing?

During the last 3 months, money has been moving into  the GDX. GDX units increased from 162.5 million to near 187 million  between March 1, 2012 and May 31, 2012. This increase in purchases equates to  $1.2 billion in just 3 months. The most interesting aspect of the money that has been moving into the GDX is that it has occurred while the gold mining sector was experiencing major declines in market values.

The HUI, tracts the Gold Bugs Index (Bugs stands for “Basket of Un-hedged Gold Stocks” which means that companies included in the HUI Index limit any hedging of their gold positions to one and a half years at the maximum), is now up over 20% from its lows since May 16th, 2012. Keep in mind that un-hedged gold companies have the most to gain when gold move up in price. It is becoming apparent that money in the know is moving into gold stocks because they feel that gold stocks have put in a bottom and are extremely oversold.

Supply and Demand Rule the Day!

During April alone, Central Banks, the Chinese, Iran and Japanese pension funds purchased almost 140 tons of gold. This amount is significant when you consider that the total annual  production of gold is  only 2,600 tons.  Subtract the 500 tons that the Chinese and the Russians produce which never enter the open market and you are left with a yearly production of roughly 2,1oo tons.

New buyers that eat up 140 tons of the 175 tons that are available monthly, put pressure on the available supply. We should all know by know that when demand outstrips supply, prices will move up accordingly, unless you follow the progressive’s rule of supply and demand which states that government can provide everything that anyone would ever want without altering the price curve. Yeah, right! If you believe that then enjoy your lower cost, better care socialized medicine courtesy of the the “Dear Leader”.

New buying is coming into the market and it will not be long before the price of gold reflects the unbalance that the new demand is bringing to the market. This is a fundamental change in the market that is signaling that the bottom of gold’s decline has been established. Gold should head up dramatically during the next few months.

Hang on tight, because gold is poised for a major move up that will leave many wondering what happened. Fortunes will be made and lost during the next twelve months by those that are willing to go against the grain and buy when others are selling and selling when the public comes late to the game.

Till next time, good luck and good trading!

More Gold Market Analysis:

• Why The Chinese are Buying Record Quantities of Gold: Revealed
• The Rumors of Gold’s Death Have Been Greatly Exaggerated!
• Three Nice Charts!
• Government Prints Money and Investors Turn to Gold!
• The Dollar’s Days Are Numbered As The Deception Begins To Unravel

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• mainstream sheep
• where smart money is moving