Gold Heads for 7th Straight Loss

Did you know that…

“The precious metal is down 4.4% this week so far, dropping below the key $1,400-an-ounce level earlier in the week as continued gains for equities and the U.S. dollar have curbed its attraction for investors.  Amid a clutch of data Thursday, news of a deeper-than-forecast drop in consumer prices for April also cut into gold’s traditional appeal as a hedge against inflation.”

…gold is a hedge against inflation, which is measured in consumer prices?  I thought it was a hedge against unbridled money creation.  That has already taken place, is now being talked down and has not worked to the degree mandated.  There is no inflation, so why end QE if we are not at 6% unemployment?  Would it have something to do with the Fed realizing it could lose control of peoples’ expectations of Punch Bowl to Infinity?

“Gold is hurt by any talk that the Fed might stop that easing, which tends to weaken the dollar and make gold stronger, though the metal has not been responding in a typical fashion due to bearish sentiment and a downturn that began in mid-April.”

…gold is hurt by talk of QE’s end?  As opposed to what, how beneficial QE has been all these months?

“Constant sales of gold-backed exchange traded funds have also undermined gold. Shares in the SPDR Gold Trust GLD -0.40%  are down 4% on the week, nearly 14% on the quarter to date. Billionaire investor George Soros cut his gold holdings in the first quarter.”

…sales of paper shares and the Soros hype are bad for gold?  Well, how good for gold were the massive in-flows to GLD and the previous ‘Soros is buying!’ hype?

…gold is going to continue getting crushed due to the lack of inflation?

As for more bearish calls, a day prior, Ric Deverell, head of commodities research at Credit Suisse Group AG, predicted that gold will be trading at $1,100 an ounce in a year and below $1,000 in five years.“Gold is going to get crushed,” Deverell told reporters in London on Thursday, according to a report on Bloomberg. “The need to buy gold for wealth preservation fell down and the probability of inflation on a one-to three-year horizon is significantly diminished.”

Maybe it is getting crushed due to an atmosphere created for the mainstream whereby it is compelled by policy to jump head first into the risk pool.  All the happy swimmers believe the water is just fine, so why would they need a barbarous, shiny rock anyway?  Isn’t Credit Suisse a bank or something?

Look, this guy’s targets are doable.  But his time frame is whacky.  Gold could hit 1100 in days or weeks because that is how it trades.  Or it could turn and burn at any time, leaving this phase of perceptions management so well crafted by certain establishment interests in the rear view mirror.