GOLD

The idea is that the FED will taper in Dec, Jan, Mar, or maybe next summer, but it will taper if the data keep improving. Only a large drop in the global economy could fuel a rally in gold and silver.

Thus, we expect to see lower prices in some commodities. However the most interesting play is the HUI.

HUI is Gold Bugs Index. We must say that the mining stocks are cheap but why are they so cheap compare to other sectors? The answer is simple; who would want to own cheap stocks with the expectations of those stocks to get even cheaper. Many of those companies not profitable at this levels is gold moves lower they will have to stop some operations..

Not many people that I know would want to own stocks that are not going to be profitable specially if economy continue this current trend. The employment print of +204k was a strong number, and combined with revised numbers of +163k and +238k for the previous two months, even better.

Once gold trade close to 1000USD or GLD breaks 100 where do you see the next support? We have to go to a monthly chart and see values from 2007 to 2009.

Then at those levels, what are the central banks around the world going to do with all the gold they acquired during the crisis?

HUI

GOLD LONG TERM CHART