by Robert Lenzner
Forbes

The price of
gold is roaring back from its latest temporary correction, sending
the bears into full withdrawal. If you sold your gold in December
as it fell to $1525 an ounce, youÂ’re probably feeling foolish
at the incredible $210 rise to $1735 – a 15% move in no time
at all.

Gold, you see,
is not a commodity like oil and copper and wheat. It is rather an
alternative currency – one that finds buyers when paper currencies
like the Euro are being hugely increased in supply by the ECB to
forestall a sovereign cum bank crisis in Europe. ThereÂ’s $650
billion in European bank and sovereign debt coming die before March
31, 2012 which can be sopped up by the $650 billion gift from ECB
to the banks at the bargain rate of 1%. And more available from
the European central bank – Europe’s very own Quantitative
Easing program.

As the supply
of gold cannot keep up with paper money (supply increases very little
despite exploration), and it can be bought without loss of any real
interest income, it seems clear that the gold bull market is alive
and well. Central banks obviously are of the mind that goldÂ’s
rise will make up for the decline in paper money and the lack of
income on central bank liquid investments.

Then, too,
the speculators already dumped 42% of their long positions between
August and December, 2011 according to the High-Tech Strategist,
a January 5, 2012 market letter by Fred Hickey that I strongly recommend.
Hedge funds sold to meet redemptions. Hot money ran at warnings
by technicians.

Read
the rest of the article

January
31, 2012

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© 2012 Forbes