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Nexvu on Economics, Politics and the Markets

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Gold

Posted by nexvucapital on May 20, 2013

Gold held the previous low and triggered a violent short-squeeze this morning…

gold

We suspect at some point gold becomes a commodity versus a religion and prices in a profit margin for its producers that warrants production. With costs in the $1,200 range the consolidation of the emotive sell-off should occur in a price-range above $1,200 (subject to any drop in production costs). In the meantime, expect considerable volatility within that consolidation process. Gold becomes a long-term buy when those who love it or hate it don’t care about it anymore as was the case before the bull market began. At this point in the cycle, we prefer copper as inflation will require supply shocks and escalating wages – stay tuned as we are in uncharted waters.

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