| Gold has been on a tear since the first day of March, with its stunning rise shocking investors.
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| One thing that didn’t shock anyone was the price decline of the past couple of weeks, as shown clearly in the following price chart with data as of last Friday’s close:
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| Seemingly every investor, trader and technical analyst had been widely expecting (and many claiming to have been predicting) a significant correction. So that apparent roll-over surprised no one.
It didn’t surprise me either. But unlike many of the newly minted bears, I didn’t claim to have predicted it or to have any knowledge of where it would go.
In contrast, my inbox and social media feed was filled to the brim in recent days with analysts confidently predicting that gold would now drop steeply, perhaps to $2,100 or even $2,000. (More of the “one more sell-off then we’ll really rocket higher” predictions that can never be proven wrong.)
If there’s one thing I’ve learned after nearly 40 years in this business, it’s that no one really knows what’s going to happen. My confidence in anyone’s opinion is directly proportional to how many times I’ve heard them say “I don’t know.”
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| All that gets me to this point: Gold and silver are surprising everyone again today, and again with steep gains. Gold’s up about $20 as I write, while silver has leaped well over 3%.
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| The jump in gold itself is surprising, even to me, but analysts are also scrambling to find any reason for it.
The excuses I’ve seen have ranged from last Friday’s downside jobs number surprise (although gold didn’t react positively at the time) and “risk on” sentiment in today’s markets (but hasn’t “risk on” been tabbed as the culprit behind many gold sell-offs?).
Few are mentioning that today’s rally began last night just as China’s markets opened after a week of being closed for holidays.
Again, the bottom line is that no one really understands the full picture behind this big rally in gold. And that may be the most encouraging thing about it.
This brings me to some impressions from my weekend trip to Frankfurt for Kai Hoffman’s Deutsche Goldmesse event....
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| Familiar Views From Unfamiliar Investors
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| While it was pretty stupid of me to attempt to spend about 24 hours traveling to spend only about 48 hours on the ground, I’m very happy in retrospect that I did it.
It was my first time at this event, and although Kai says company attendance was down, I was pleasantly surprised at the top-quality juniors presenting and the extremely savvy investors attending.
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| I had stimulating discussions with dozens of sharp European investors who I would have likely never met otherwise, and I was pleased that my presentation was standing-room only, with some great questions from the audience.
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| One of the things I stressed is that, as noted above, there’s still some mystery behind this big move in gold.
Even though we’ve pinned much of the buying to central banks, domestic and official Chinese demand and some speculation on Comex and the Shanghai Futures Exchange, I expressed my belief that there’s other significant buying out there.
And I think this buying is based not so much on any factor, but on a general feeling of unease with regard to the current global macroeconomic environment...a view that debt loads today are completely incompatible with interest rates at current levels.
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| In short, big, smart money is moving into gold. And this undercurrent of demand is likely what’s driving the price higher on days like today, when there’s no other driver that we can credit for the move.
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| I’ll share more impressions from this conference and gold’s latest moves in the days ahead. For now, it looks like calls for further gold-price declines may have been premature, and anyone waiting for that to build positions may end up left behind at the station.
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| Brien Lundin
Publisher, Gold Newsletter
CEO, the New Orleans Investment Conference
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| CLICK HERE to watch interviews by Brien Lundin and Kai Hoffmann with many of today's most exciting junior mining companies on the
Gold Newsletter Youtube channel.
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