Gold and the European Bank Bailout

Of course Greece per se is not getting "bailed out". It is the lenders to Greece that are going to be made whole, for now. The mechanism is more debt creation and more leverage. It is a hair of the dog strategy that is fundamentally bullish for gold.

Gold's 50-day moving average is now decisively above its Jan. 21 high, and the shape of the curve is now concave upward; then it was convex and pointing down. The 150 day and longer moving averages never stopped moving up. Gold remains the only major asset for which the technicals and fundamentals (such as gold has any fundamentals) remain bullishly configured. Trying to pick the top of any asset in such condition is impossible. Think NASDAQ 199-. Why not a top at 3000? We're near 2000 a decade later. So 3000 was lunatic. But we went 2000 points and one year later. Meanwhile gold measured against the Dow or housing prices is barely in a bull market at all.

The more speculative precious metal is silver. We shall see on that one.

However, investing or hedging in gold is not easy. The gold fund "PHYS, the Sprott Physical Gold Trust, burst on the scene just a few months ago and is now at a 20% premium to NAV. Such is the anxiety over whether the GLD fund actually has possession of all its gold.

Relative to PHYS, the now smaller but better established fund Gold-Trust ("GTU") is at a mere 10% premium to NAV.

Neither of the above funds can be easily (or at all) sold short and have no linked options. So they are to buy and hold, or trade.

Back to silver. This site has mentioned Silver Bullion Trust several times. Very recently it sold at a discount to its silver. The price has now markedly outperformed the metal and is at about a 7% premium to NAV. There is probably a few percent more outperformance in this fund based on current bull market premia for GTU, the associated Central Fund of Canada ("CEF"), and PHYS, but investors and speculators are now buying silver with SBT.U (Toronto, and associated bulletin board SVRZF in the U. S.), not undervaluation any more.

As far as traditional stocks go, they don't really count anymore.

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