The Gold Bug!

Can Gold be the Next Oil this year?

Gold ride is shaping up like the bull run of Oil and blow up may be this year!

Reasons:

Old story of Fiat currency & hyper inflation will take a new meaning as unlike in the past US government is supporting a weak currency! And pushing big time towards export – through Manufacturing! Now this being a very different approach from the past – brings a dilemma to the investment community- which used to bet on Gold with the hope of higher rates to support currency! Now that assumption is out the door! With China and Japan fighting to keep their currencies weak to feed US market & European Export book is in the verge of collapse with a weaker dollar- ECB is afraid to let the Dollar collapse as it will break their economy!

The Obama administration is playing a delicate & dangerous game in fixing the local economy – and might get away with it and get rewarded - given the precarious nature of the global political climate!

Talking of climate - Even the climate control will work in the developed economies favor as it could slow down emerging economies in the name of carbon!

During the melt down - the Treasury & Federal Reserve were dancing to the tune of the bond/treasury holders...like PIMCOs of the world- now the cards have changed: Recently Larry Summers immediately slapped PIMCO's assessment of the economy and saw a adjustment from the PIMCO management with some soothing words in line with the Obama play book! From Goldman to GM - everyone playing to the same tune! Geithner & Bernake fighting their role and credentials in congress- unlike anything from the past - shows their courage - even as they fine tune their scripted speech to sound like the Obama administration..the Bonus issues...And on and on....all indicating how strong and determined the current administration has become. Unlike any in the past - this Administration has fully focused on domestic issues and politicallly correct foreign issues - to bring back focus to a balanced labor mix to the American Economy - a deviation from the past several decades where the Administrations have left the economy to drift towards services and white collar jobs....leaving a gaping hole for the labor force.

Gold Speculation : While UK and Germany etc sold Gold at $230 an ounce USA kept its 8100 T of Gold and on book it is valued at $45

Weak Dollar:

The Good: Export oriented economy is supported enabling reduced trade imbalance

The Bad : Import prices increases with expansionary inflation – mitigation: RNB wedded to dollar and China being the largest exporter of the Walmart economy -will keep American Economy & inflation in check

The Ugly: Huge debt burden and the chances of revolt by Bond Holders – Solution: Creating uncertainty in the global market and support from foreign central banks which rely a lot on US market will end up eating by fighting against each other ( China 1-Japan -0 ; India with 200T Gold managed to be creative in keeping a sliding Dollar and a surging local economy from strengthening the Rupee), Fractional EU and Middle East turmoils, Russia on the verge of melt down AGAIN with the low oil price.on and on)

Technically speaking - obviously looking at the rear view mirror - Gold has always topped out at 5X - if we take the current bull run to have originated around 250 - it should be there right about now or just around the corner.

Current Gold price target : ranges from a low of $1500 to a high of $6500! Sounds like the oil prediction from Goldman and Morgan Stanley of last year!

Soros: EU would like to see UK crumble- obviously a wishful thinking given the fact the London Bankers still rule the European Financial markets! The fate of PIGS in the EU community - also underscores the ECB's headSTORM! With regional politics and deficits rampant - ECB will be helpless when France and GErmany fare well at the expense of weaker siblings - this scenario will hinder ECB and other European heads to fight US printing at will.