New York, Dec 28 : At the
beginning of 2012 gold bulls had a straight forward thesis: Central banks around
the world will continue to debase their currencies.
The virtually
unfettered money printing with no set ending would, the thinking went, result in
rampant inflation and in so doing drive investors into gold.
Jeff
Kilburg, founder and CEO of KKM Financial is among those with a bullish gold
thesis. In November he came on Breakout suggesting investors get long the SPDR
Gold Trust (GLD) in anticipation of the FOMC's balance sheet expansion. He got
the expansion, but the GLD yawned.
"It's a head scratcher," Kilburg says
of gold's lack of reaction, in the attached video. He believes gold's lack of
zest is yet another unintended consequence of the fiscal cliff. The focus on the
nation's fiscal nightmares has traders fixated on the cliff rather than the
currency debasement.
The Fed is fighting deflation. Inflation is
something they can control, but no credible economist has yet to find a solution
for no one buying goods no matter how low prices fall. That may or may not be
the right play for now, but Kilburg says when inflation comes it's going to come
in a fast and furious manner, driving gold well above $2,000.
If Kilburg
can't hold the $1,670 area, where the price is sitting this morning, he'll start
trimming positions. Commodity traders aren't dip buyers below support levels.
For those with a more trading mindset he suggests hedging bets with some puts
underneath, limiting losses while waiting for gold to regain its
luster.
Ends
SA/EN
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