Gold Bugs Beat Bullish Drum

In recent years the gold bugs have beaten a bullish drum, especially during the dips in the rollercoaster ride. Having touched $1,000 again it has since drifted to $875. The uptrend support line is around the $750 level so no time to panic as yet.

But as Peter Brimelow says,"There is disturbingly universal expectation among gold-watchers that Federal Reserve monetary expansion must blow off into inflation." My concern too is that all this creation of dollars is actually masking the fact that so much dollar wealth has also been destroyed. If this is indeed the case then inflation will not necessarily take hold.

Gold markets are particularly prone to noise. Unlike stocks and bonds, gold yields no interest, and unlike crude oil gold is only marginally used as an industrial product. This means that profits of the buy-and-hold variety are only forthcoming in an uptrend. The other option is to just follow the charts and buy and sell accordingly. There are many large forces in this market that do not show their hand by writing newsletters. Look at the numbers, not the noise.