Thursday, July 15, 2010

The Bearish Bull

By Neil Charnock

I have taken some excerpts from our new GoldOz Newsletter service to construct this article. Even the hedge funds boys are reportedly dazed by market action after their worst performance in 18 months during May. Has it been difficult to assess the markets this year? No it has been extremely hard. This is firstly because of the political and regulatory changes that are clouding the picture. The second difficulty is that we are transitioning into a new financial world and I do not say this lightly.

Take Greece for example where there are riots in the streets and default hangs directly overhead. They need strong growth to provide an economy that can pay back debt and thereby overcome chronic deficits. Yet SME’s (Small to Medium Enterprises) have only been able to borrow €85M in the past 6 months to end June this year and at a whopping 22% average interest rate. In 2009 by contrast they borrowed €900M.

Changes are part of the system and quite normal. What we refer to is different I assure you. In general terms most people are chronically bad at change therefore the adjustment will be confusing and painful for many. What was the old normal and why am I talking about this? It has huge ramifications for gold that’s why. I am discussing an essential reason for gold to go up and the timing of such an event. (more)

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