Sometimes, we think that every story in the gold community has the same template:
I have inside information to share with you My peeps are telling me that <XYZ> will happen If <XYZ> happens, then the gold price will go ballistic (<XYZ> will happen, I just know it) So buy gold now, to front-run <XYZ> If you, you will make lots of money (Money is not gold, but dollars) Unless The Dark Cabal acts in their old nefarious ways If The Dark Cabal does, then don’t blame us Like the last time we predicted $200 silver or $30,000 gold We read articles this week, reporting that China is considering additional limits on importing gold, that the premium for gold in China hit a 3-year high, and imports into China fell in the month of October. At the same time, imports to India rose moderately in October, and of course there are rumors India will ban gold imports too.
Based on the above, should you lever up $6,600 in capital to bet on the price movement of $118,000 worth of gold? Or go bigger, lever up $66,000 to bet on over a million bucks of gold? If so, should you bet on a rising price – or falling?
We respectfully suggest that there is no information content in the import numbers (much less rumors of future political decisions). Zero. You cannot use them to predict the next price move.
In the same way that you could not predict either the US election, or the impact of the Trump victory on the gold price.
You can’t get there from here.
Why not? It’s because the gold market is huge. It’s even bigger than that. Virtually all of the gold ever mined in 5,000 years of human history is still in human hands. And all of that gold is potential supply, at the right price and under the right conditions. There are billions of people on the planet, each of whom represents potential demand for gold with the right price and conditions.
This post was published at GoldSeek on 28 November 2016.
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