1) Gold had an all-time of 875 as far as I know. The fact that it broke that and went to 920 first prior to selling off I think is significant. We've already proven that the 875 barrier is no biggie.
2) In my mind there's little difference between 1,000 gold and 1,200+ here. Most of the incremental demand is investment related. Those that focus on falling jewelery demand here are very misguided.
3) Global markets sold off between 2001-2003 and gold and gold stock outperformed everything. Why does this time have to be different? We've had a period of decoupling now that's going to get stronger and stronger going foward. Track the $Hui:$spx ratio longer term. Big breakout signaling the next leg imho.
4) Gold has underperformed most commodities the past few years and is relatively cheap by comparison. It has recently just started to outperform again. Once this trend starts I don't think it peters out this quick.
5) The Fed has to cut a lot more. Dollar will stay reasonably strong simply because the other currencies also have their problems (Yen, Euro) or have become overvalued. However gold is rallying globally now so a stronger relative Dollar is not as big of a concern to me ST, IT. Long term the Dollar still has big problems.
6) Gold is starting to act like a currency here. No way China can diversify into gold with their surplus Dollars, but they can move an incremental portion. The gold market is tiny by comparison.
7) At the present there is no big deflation scare even though it's certainly happening in many parts of the markets. I don't think gold gets wacked until the Fed and other CB have shot their load and it still makes little difference. By that time I think gold could be 1,500+. Then maybe deflation takes us back to 600-800 again before going much higher.
8) The econ news will continue to get worse for sometime going foward. Until there's more clarity the Fed will have to stay on it's easing course. Even if we somehow manage to have a soft landing (I can't see it) we won't know for sometime. In that environment gold should stand to gain from easing as well as financial instability.
9) Yen-carry trade has more to unwind, but once the forced selling is over the forced selling pressure on gold/gold stocks will abate imho.
10) In the 70's gold spent just 4 days above 600. I see no double top. In percentage terms this gold move is not anywhere extreme nor has it gone parabolic yet.
11) Public is still completely ignorant on gold. If we can't have a wave III in gold under these circumstances then when? It seems to be that gold is tracking energy, but with a 2 year lag.
I would prefer gold to stay above 820 preferably above 850 ST. If not I may have to revise my scenario.
These are just off the top of my head. Sorry if it rambles.
