Thursday, 18 April 2013

Interesting to re-visit Jon Nadler's interview on Kitco regarding gold in 2013 - posted 18 April 2013

It is indeed interesting to re-visit Jon Nadler's interview on Kitco regarding gold . It can be found here:

Well, what do you know? He was spot on correct!

There is not so much gloating over his departure now, I can bet.

Not that I liked his commentaries beytween 2010 and 2011. As something of a goldbug, I thought that he was far too bearish in that period and I recall he said in an interview in 2010 that gold would top at $1380. However it went to $1920 in 2011. Even so, I listened to him and read him sometimes, to get a balanced perspective on the market, rather than listening to goldbug rhetoric all the time!

Ironically, now it is back at $1380. There was a lot of congestion and resistance between about $1360 and $1430 between late 2010 and early 2011 before the big runup in silver and then in gold later that year. Now the price has bottomed in this April 2013 crash at $1355 and is struggling to get back above this congestion area if it can.

This was an excellent interview from Nadler. Jeff Christian, the other favourite for slamming by goldbugs, had an excellent interview on a Kerry Lutz podcast this week, on 16 April 2013. He had expected gold to correct and to bottom around $1430 and says it fell further than he thought., He thinks that $1355 is likely to be the bottom but that the price might move sideways for another couple of years and go to a new high sometime near to 2020.

On the other hand, here are some tongue-oin-cheek links to my previous blog posts on Jon Nadler, who was looking for gold top top at $1380 in 2010. Strangely, gold is now back down to that level, wiping out nearly the entire positive effect of QE2+QE3:
and this one:

[The wiping out of the QE2/QE3 positive effect on gold would be complete if gold were to descend to $1155 and complete the target of my 3 peaks and a domed house pattern!]

It is possible that the US dollar index is in a bullish trend mostly due to pretty hopeless other currencies (Euro, Yen, Pound) and such an uptrend, if typical for the period 1970-2008 would last for about 8 years, from 2008 to 2016 fir instance. So maybe gold will trrade sideways to down until 2016. I hope not, but I feel that this correction in gold has been so much more bearish than the one in 2008, because the backdrop then was a massive crash and deleveraging in most markets and the banking system. This time, gold is crashing just after stock market has made new highs. The Dow has massively outperformed gold in 2011-2013, unlike in 2008 when it underperformed.

I still can't make up my mind whether the crash in gold to $1355 where it is obviously very oversold is a selling climax to be followed by a great big rally or if it is the first major leg down in a longer bear market (hopefully a cyclical bear not a secular bear).

Fundamentally, currency failures and the hopeless state of government finances in the Western world and Japan should be very bullish for gold indeed, as should the terrible state of the banking system with so much insolvency and corruption. However, for how long will central banks of emerging countries keep holding up the gold market as the leveraged speculators exit it? And will we see a couple more years of rising gold production before this lower price plays out in the cancellation of a lot of new mining projects, the bankrupting of many junior exploration companies and a fall in gold and / or silver supply to the market?