The mainstream media and blogosphere occasionally seem to begin to understand gold. Ed Yardeni at Business Insider: “More broadly, gold is a hedge against reckless fiscal and monetary policies.” Then he continues: “The dramatic appreciation in the price of gold may be limiting its upside from here since it has already discounted a great deal of that recklessness.”
Discounted the recklessness? Gold bottomed at a depressed price of $250 at the end of a two decade bear market. Since then the credit bubble has grown immensely. The Fed induced housing bubble was only the largest part, now dwarfed by government debt. ZIRP? TARP’s, TALF’s and a myriad of other acronyms? Does anyone else think the student loan bubble gets monetized this decade? QE1, QE2, Operation Twist, now talk of seeming expectations of QE3 soon enough. Does QE to infinity sound funny to the non-goldbugs anymore? Rather than suggest gold has discounted anything, consider gold could be more fundamentally undervalued now than at any time since Nixon closed the gold window!
Kinross, gold producers vow to fight back as shares tumble despite rising prices. Globe and Mail
Anyone have any thoughts on Kinross? 5X cash flow, $1.7 billion in cash and building Tasiast. Or is Franco-Nevada through their royalty the best Tasiast play? Kinross
I wrote an article on an alternative investment strategy to bonds. The push-back from the mainstream is striking to me. Seeking Alpha Meanwhile, the goldbug community is sure to strut with glee over the JPM news. Make it a good day!