GOLDBUGS AMEX Goldbugs Index (GOLD)

[Joe Kernan]

i agree.

these are strange times, and strange times are good for gold prices in the long haul.

the dow was up 10% in a day, an amazing creation of wealth. but where did it come from? is it simply a more fair evaluation of what the companies are worth, or a reflection of what the future earnings are, despite the economic downturn?

or is it a pumping of fiat cash into the banking system?

if it is the second, then gold will rise in price unless it is manipulated. The IMF has announced several months ago that it will begin selling off its reserves over a 10 year period, clearly in anticipation for these events. This will keep the gold price lower, feeding the growing demand for gold in inflationary times. However, the key analysis that needs to be made (and it is far from my ability or anyone else's ability to accurate guage this) is whether or not the IMF sales will accurately be tied to the dollar supply's increase.

the rality is that there is indeed a limited supply of gold, and that these events of the last few weeks will certainly create demand. So, even though the gold price is manipulated, it is only manipulated to the extent that it will not go lower, therefore there is little risk. However, if the manipulation is inaccurately applied, there will be some to gain.