Keep Gold Bug Dogma on a Leash

By Biiwii

As posted at TalkMarkets as an exclusive…

au2016 has seen a big rally in gold, silver and the miners.  It has progressed from disbelief to full frontal bull market in 6 months’ time.  Nearly one year ago we began noting the elements that would need to come into place for a legitimate gold bull market to engage (ref. Macrocosm), and wouldn’t you know that gold’s upturn vs. US and global stock markets has greatly aided the case for gold’s fundamentals?  The net result of these macrocosmic elements has been the most important fundamental of all, a loss of confidence by the average market participant in centralized monetary authority the world over.

Okay, that’s the good news (for gold, anyway).  The bad news?  Every damn gold bug on the planet is out of the woodwork to ply their trade.  In some cases their trade is to provide quality (if sometimes cliched or strident) advice about the fundamental backdrop.  In others, it is to provide ‘best guess’, but relatively sound technical analysis.  But in all too many cases their trade is you dear reader who may with a level of anxiety, be looking for financial refuge in the storm.  Beware of writing that uses fear, hyperbole and worst of all, borderline religious ‘good vs. evil’ imagery.  That is emotion and the gold “community”* (as it calls itself) have a long and checkered history of tugging at people’s heart strings.

Gold is simply an anchor asset.  It’s price does not move.  What moves is everything around it; all the dividend paying or growth investments and speculations.  When risk is ‘on’ gold tends to go out of favor.  When risk is ‘off’, the fear trade is in play and gold – the ultimate financial insurance – is in favor.  For the sake of mental health, it pays not to read much more into it than that.

Continue reading at TalkMarkets →

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