Jim Rogers – Gold not in a bubble

Posted by Andrew Mickey - Q1 Publishing

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Maybe you have too much inflation and credit creation. But that doesn’t mean there’s a bubble. A bubble is when everybody is buying everything every day, and people can hardly wait to get more.”

This is why Rogers correctly states that gold isn’t in a bubble, as the average investor hasn’t really began to invest in gold, making the idea of a bubble, as Rogers defines it above, largely irrelevant.

John Embry: Gold to hit $1,350 – $1,400 by late Spring This is a snippet of an interview by Andrew Mickey, Chief Investment Strategist of Q1 Publishing with John Embrey the chief investment strategist at Sprott Asset Management, regarded as one of the world’s leading gold experts.

Andrew Mickey: Let’s switch our gears for a moment here to gold and silver…right at this point, everyone is focusing on the long, long term, say 10 years, 15 years out.

John Embry: I’m focusing on the next two months and I think we are going to have an explosion in the price of gold.

Andrew Mickey: Do you see a specific catalyst?

John Embry: One of the great factors is sentiment right now – the sentiment that you just mentioned. There is currently considerable apathy towards gold and silver. However, demand is exploding on the investment side, for the simple reason that people can see, with each passing day, that the currencies are going to be significantly debased.
You’ve got enormous government financing requirements over the next 12 months. Where is the money going to come from? A lot will be created out of – thin air and, that’s going to result in a huge volume of new currency.

I see the demand from the investment side alone just overwhelming supply. And on the other side you’ve got diminishing supply.

The central banks are running out. And you can see this with the central bank sales each year. The European central banks can sell up to 500 tons a year, they are not selling anything near that.

And lastly, all the eastern central banks that are jammed with US dollars are talking about diversifying into other assets, one of which is gold.

Central banks have been major suppliers of gold to fill the gap in the market for years. That’s coming to an end. At the same time mine supply continues to plummet. So I will be shocked if gold is not dramatically higher in the next three or four months.

The above is a bullish view which we pretty much concur with, however the bearish view can be summed up by this snippet from Ronald Rosen of The Rosen Market Timing Letter. (Ed Note: Rosen confirms the long term bull, just expects a further correction right now on a technical basis. This differs from Embry’s who takes a fundamental viewpoint)

Sorry to remind you folks, but a bull market goes up on rising volume and rising open interest. A correction in a bull market goes down on declining volume and declining open interest. The A, B, C multi-month correction in gold and silver is being accomplished with declining volume and declining open interest. The final C wave down will begin soon.

The same data but two totally different interpretations of just where gold is headed. The next three months or so are certainly going to be interesting and most probably volatile so hang onto your core position and go gently when trying to trade the short term moves of gold prices.


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