Today was an exciting day for gold. As all markets began to capitulate, gold started to catch a bid around 1640. Within 20 minutes we had broken last nights high (1655.9) and made a high of 1664.8. All the while, the equity markets were making new lows. Gold was on a rampage. If you tried to get short, you unquestionably felt some pain, because every pull back on the way up was small and fast.
Over the past months, gold has slowly grinded higher, and the swift moves were always to the downside. This swift up move, as well as the fact that we are not moving in lock step with the S&P makes the environment for gold more exciting.Trading 60 now, I expect that we test 68 by some time tomorrow, but don't feel comfortable making any bold calls. I am far more used to the gold/ stock market correlated behavior, so I think this is a good time to watch and pick spots rather than being too bold.
One fundamental piece worth noting is that the taxing of non-branded gold items is on hold in India. (see the following piece http://www.vancouversun.com/business/Indian+jewellers+strike+after+government+delays+gold/6394400/story.html)
I am a believer that the long term bull case for gold rests not only on the notion that central banks will continue printing, but also the fact that gold IS money to the residents of countries like India. Anything that promotes buying gold in countries like India is bullish for the metal... lifting a consumer tax certainly fits that bill.
For anyone interested in watching a piece about how gold fits into Indian culture; please watch this video that was recently produced by 60 minutes.
http://www.youtube.com/watch?v=Xchc2ezcHXA
Happy Tuesday,
Benjamin
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