Gold Price Increases from Years of Suppression, 2/24/06

I cant believe at times, the so called collective wisdom, of the bullion market pundits, or should I say, the knee-jerk heard mentality and misdirectives of those allegedly in the know. The value of the dollar, oil prices, budget deficits, equity markets, trade deficits, terrorism, and even war, are all nice things that planet wall street likes to talk about, as is their elementary school training and desire for mutual back slapping being always correct time and time again, about how to justify to the sheeple recent upward moves in the price of gold (POG). However, these gold pundits are the true delirious Oracles of Delphi camping out in golden Maecieni. But they all miss the boat, time and time again. Here it is, in a nut shell.

World bank gold sales for the last decade, has suppressed the POG through the 90s, and to this day, but is finally running out of steam with deficit gold stocks in the banks to continue the suppression in earnest, and consequently, gold has made a spectacular come back since 2001. It is all simply market fundamentals, and no more. Curious how, in the end, its all fundamentals. Get it? Apparently not.

World bank gold sale suppression, that is, world bank POG suppression sales, loans, and leases for continuous short selling, major mine hedging, and massive commercial short positions have all functioned collectively to suppress the POG over the last two decades. The suppression of the POG has compounded the problem by producing low mine exploration and bullion production, naturally so, but with increasing demand in the face of decreasing supplies and increasing spot supply-demand deficits, and in combination with environmental resistance to new mine openings.

These sound fundamentals are the driver in the increases in the POG, presently in the face of a massive commercial short position build up over the years, now looking forward to massive short squeezes to propel the POG into four figures and soon. However, any direction to war with Iran as the caused, is misplaced in a first order analysis, but may be the second order analytic catalyst for the inevitable pending massive short squeezes, and parabolic accelerating POG prices in the near and long term.

It will take a massive short squeeze, four figure POG, five to seven years of increased POG, and increased exploration and production to bring the POG back to normal equilibrium, as is, in normal commodities markets. So, having a personal POG target of $2750/oz by 2010, buy gold, silver and PMG bullion and share positions, and buy some popcorn, and then kick it, watch the fire works, and make the big money, it’s a no brainer.