MV Mailbag: Why Is Gold Down?

Lance Lewis  Jun 15, 2009 11:05 am

MV Mailbag: Why Is Gold Down?
 
Gold bulls need to be prepared for violent swings.
 

 
Editor's Note: The following was posted in real time on our premium Buzz & Banter (click for a free trial). It's being shared here for the benefit of the Minyanville community.

Prof Lewis,

Why has gold been hit the last few days?

-Minyan MC



Minyan MC,

I suppose some gold bulls are upset that a story in the Wall Street Journal said the Federal Reserve is unlikely to boost its purchases of Treasury bonds, so some might think this has removed a near-term upside catalyst. Who knows? (I’m not sure I buy that story’s message either, incidentally).

But let me emphasize: Gold is a long-term play. The US government has only 2 options: default or debase. Both lead to more inflation. What the Fed “wants to do” is irrelevant. What it will be forced to do is all that matters, and it will be forced to monetize more government debt this year. Whether that's in June, July, or August doesn’t really matter. The picture hasn't changed.

Gold bulls need to always be prepared to take violent swings, just as short-sellers in the financials did last year. Like those sellers of financials, gold bulls will get paid off big at the end of the day if they stick to their convictions.

For more data, look to GLD or GDX.

Best,
Professor Lewis
11 of 14 (79%) found this helpful
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Comments (11) See All Comments »
06-15-2009, 2:27 pm
You two guys seem to have a man-crush on Lance. What's with the obsession? Jealousy maybe??

Let's see.... Lance has been steadfastly bullish on gold over the past two years, and gold is the only asset that is up in dollars
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06-15-2009, 3:43 pm
If there were other "contributors" at Minyanville shilling one lone idea, relentlessly, with zero wit, dull writing style, etc. I'd be all over his/her @ss too. Fortunately for the readership that is not the case.
Here, I
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06-15-2009, 10:22 pm
Paul,

My comment re LL are well establish here-- I have justified my reasoning why he should not be a part of the community or at the very least, the Buzz & Banter... I will not resort to personal attacks as you have just done with y
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06-16-2009, 12:46 am
Wow! According to LL an article published in WSJ last Friday (6/12) is responsible for bumming some gold bulls... apparently retroactively back to 6/3, when the current slide in gold commenced in earnest.

I reckon the pen is mightier tha
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06-16-2009, 1:02 am
What a wonderful topic for an informed article!

However, since it would need some discussion of when to sell, LL will not be the one to write it. Try over at Seeking Alpha.
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