People have thrown in the towel on gold in favor of momentum trading in stocks. It seems nearly everyone is a momentum trader now, one of the consequences of inept central bank bubble-blowing policy.
The only way to make good is to buy the physical gold. And that feat is only getting harder and harder to accomplish as more and more gold is being bought by Central Banks, Governments and average investors.
Last week, EU growth projections were reduced by a further 0.1 percent to a negative 0.4 percent. Facing this grim reality and shrinking resistance from the dominant Germans, the EU bureaucracy appear to be becoming more lenient.
The tidal wave of selling would be expected to be the coup de grace for gold's glory years. While this neat narrative may be sufficient to convince the financial media that an historic shift is underway, wiser minds will see more nuance.
It is not a difficult stretch of the imagination to envision Portugal, Spain, Italy, and Greece, among others, finding themselves in the very same dilemma as Cyprus when it comes to being forced to sell gold.
It may sound absurd to those of us who remember the economy before the crash, but our new economy can't tolerate "sky high" rates of four or five percent. What would happen to the housing market and the stock market if interest rates were to return to those traditional levels? The red ink would flow in rivers.
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