As requested and just so my thoughts are caught up since before having access to post (nobody’s going to see it), I’ve reposted a comment in reference to a 2/14 entry regarding Winelover’s take on things.

 

 

http://goldtadise.com/?p=362974

 

1) Winelovers’ last graph I believe should be inflation adjusted in current $’s to more accurately depict ‘where gold is and how low it could get’.

2) I don’t believe we should ignore the recent oil/gold ratio high (45), which historically when it is at very high levels (over 20) which of the two commodities most commonly corrects to revert to the mean (16) – answer > oil. Personally I cannot see a scenario where <$30 oil is more sustainable in the world than gold first crashing to $600 – i.e. due to global mkt forces (including wars or CB policy to force inflation or devalue the $) – oil will rebound before gold gets cut in half.

3) Winelovers’ 3rd chart TA comparison of 98-00 vs. now does not (nor was intended to of course) consider all the world events and market forces that were in place during that time – market was relatively euphoric and US economy stable after resolution of LTCM debacle vs. now where the entire stock market rise for the past 6 years has been built on central bank engineering of a magnitude not seen since the great depression. 16 years ago CNBC wasn’t talking about NIRP, banning the $100 bill and the fact that the US public is gradually becoming aware that the Fed and central banks in general in fact have no clothes and currency value = faith (fiat). If the #3 world economy in Japan can go NIRP, why can’t the US? There are greater world value-of-money and power issues in play that I don’t think existed in the late 90’s.

These reasons in addition to Spock’s already documented thesis’ are why I think a small pullback ‘may’ come but it’s just as likely gold won’t look back at these levels for a very long time.