Source: Nick Laird,

My job is not to tell you if the rumours are true or not; it is to share the stories I find and let you make your own judgement call. What do you think? Where is the gold going? Is it going to replace the reserves that Germany wants back? Is there a lack of gold supply for the ETFs that are supposed to be backed by gold?

So many questions…

Gold Price Expectations

I have to believe that fundamentals will eventually catch up with the market, but the amount of intervention by the powers that be is really messing up the crystal ball. I expect that gold will continue to be manipulated and attacked. That is why I said be weary of gold prices in a recent letter.

The record liquidity by the big four central banks has been injected to boost confidence in the market by forcing economic growth via artificially inflated asset prices; in particular, stocks. But if gold continues to move higher, their work would be worthless as the liquidity they create could be fuelled into gold.

If that happens, there will be billions of dollars injected into the gold sector that could otherwise be used elsewhere, such as the stock market. When the stock market is generally considered a leading indicator of our economic future, you can bet the big four will do whatever it can to make sure the money goes into stocks, and away from gold.

Does the recent attack on gold mean it has reached the point of capitulation? Can central bank purchases overwhelm the highly leveraged short sales in the market?

I am not sure we’re quite there yet to overpower the banks, especially when China and other countries would prefer to accumulate in secret as to not drive the price of gold up. Most technical indicators signal that we may be headed further down for gold, but support levels still remain for silver.

Many of you may be tired of hearing about gold, silver, and currencies; I am tired of it too. But the hard fact remains: money and wealth protection against the monetary policies of the big four central banks (BOJ, the Fed, BOE, and ECB) need to be addressed now, to prepare us for what will happen in a few years.

It may be a distant memory, but early last year everyone was screaming to get out of equities; yet, I called for the S&P to surpass 1500. Believe me, it wasn’t an easy situation as many of my readers include some of the biggest analysts and fund managers in North America. I got emails and phone calls calling me an absolute idiot for thinking that the stock market was going that high. But I stuck to my guns and here we are now a year later, with the S&P well above 1500. Now everyone seems bullish. Go figure.

My point is that the same can be said for gold and gold stocks. The sentiment for gold stocks has never been worse.

The Hulbert Gold Newsletter Sentiment index (HGNSI), which measures market timers’ recommended exposure to the yellow metal, is now at -31% net short, the lowest point since the inception of the survey in 1997.

When sentiment is at its lowest, it usually signals a great buying opportunity. We may still have some downside, but that only signals a better entry.

I can’t call an exact gold price, but I do believe it is going higher long term. Anyone that believes they can call a specific price number is just guessing, or they know exactly what both the big four central banks and the emerging markets will do; in that case, they should be President.

A major rise in inflation could be many years away, but soft commodities are already showing us signs. For example, cotton and frozen concentrated orange-juice futures are up 13% and 22% since the end of last year. And if you go back to my letter, “A Scary Prediction” you will see that the price of many food and essential items have been steadily rising.