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Clearly the $64,000 question as far as the result of all the QE we have been seeing over the past few weeks, and that which we have been promised is will it mean that Gold will finally take off for good? In the recent past there was the false dawn of 2009 – 2011, followed by the mini bubble burst from September last year to August this year which hammered Gold and the miners and will probably put off 90% of those seeking to make their fortune in this area.
I am reminded of hedge fund legend Hugh Hendry’s words of it being possible to lose just as much money being too early to a party (a market taking off) or too late. The hope and the view now is that will many of the weaker players out, Gold and Gold miners will fly as never before. Indeed, favourites such as Condor Gold (LSE:CNR) have actually been leading indicators on the latest Gold rally.
However, there is one ingredient missing. All the fizz we are seeing now could still fade away unless / until the $1,790 2012 intraday high of the year for Gold is not broken on a sustained basis. Let us just say that below this big number if you are not already exposed to the excitement of this asset class it may pay to wait.
QE Or Not QE?
“Central bank action is work of the devil,”says the German Bundesbank chief Jens Weidmann. Well, of course it is, even if you don’t happen to believe in the devil. Just as lawyers would love more and more laws to litigate with, and dentists would love us to eat only sugar, so central banker have in the past few years delivered a regular heroin style fix to keep us in debt (financed by us and paid to the Government in the form of more and more tax) for ever and ever amen.
We are reminded of the nightmare once again today, on news that the Bank of Japan has just served up another 80tln Yen. Of course, the Japanese Model is the model that we in the West have been following for 5 years. There was a bubble here which burst in 2007 and we have been QEing ever since. There was a bubble there in 1990 and they have been serving up the QE for the past 22 years. It has not worked for them and it won’t work for us. But as it has only been 5 years here we feel that a turnaround could be just around the corner. Perhaps after another 17 years we might feel differently?
Lonmin – A Chamberlain Moment?
It would appear that we have seen a cure for Platinum miner Lonmin’s (LSE:LMI) current woes, and the shares have bounced quite sharply. But could it be that the 22% pay rise after the 45 deaths is effectively a “peace in our time” moment before the politics of South Africa return to this situation. Certainly, the miners have taken their 30 pieces of Silver, but the continuous background noise being told that they are just working to fill the pockets of foreign multinationals who are robbing their nation’s mineral resources does not seem to be the correct atmosphere for industrial relations harmony. At the very least Lonmin looks to be rather vulnerable to blackmail going forward.
