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Subject:  Re: Gold - Updated TA Date:  5/26/2012  2:24 PM
Author:  MDCigan Number:  41091 of 41572

The bigger question is, how low GLD can go and whether I should wait.

Yeah, I don't I pointed out gold got cut in half in the 70s secular bull, and then in the other posts I've shown some reasonable price levels for a correction. To me, it comes down to the fact that we live in a global economic world with powerful deflationary pressures, and the main inflationary pressure is central bank money printing, and government fiscal stimulus. Its clear to me that whey they take their foot off the gas pedal, the deflationary pressures resume, so the question is how much does the economy have to slow, and stock indices fall to bring about the next round of policy action. Europe and the ECB are operating on a different plan from the Fed. I don't think the Fed would wait to see the 2009 lows on equity indices to take extremely aggressive reflationary measures.

When you buy or how much you should wait is more a process question in my mind than trying to guess at a bottom. One thing I will agree with the gold critics/skeptics is that it is very difficult to value gold. I've seen variants of looking at money and credit growth versus gold price, but I'm not sure how valid that is. So I don't think you can calculate a real good "fair value" and then buy at increments below that. My solution to that and really most risk asset exposure is I want to minimize exposure when all the trendfollowing/momentum indicators are negative. Whereever gold bottoms, I won't be riding it down. I most certainly won't be buying the bottom, but odds are good when I reestablish the position, I'll be getting back in on the next multi-year uptrend.
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