Will Gold Move To a Bear?

Some people are calling for gold to correct with the rest of the markets in this bear as it did in 08/09. Not to sure if I agree...

Argument is inflation/deflation for the bear side with global ST deflation a possibility with EU and China bears. Problem is that is not the only component that is driving gold. The decoupling of POG from the USD this spring has major significance that some people are just plain missing. Gold will selloff on the all asset liquidation days for sure, but it will have major strength as an emerging alternative currency.

Any price movement between the 50 and 200 MA's is a major buying opportunity. With impending implosion of the Euro and sell-off of major currencies, an obvious choice has been gold. Confidence will not return to the currency markets for awhile so this trend to buy gold as a currency hedge is increasing, not decreasing.

Added to this fact is that the long term result of printing all this money today to bailout the financial crisis and now this impending debt crisis, is that there will be major inflation over the long term. Prices don't go up because of demand, but because of a falling value of a currency. Simple. Too much money added too quick will take down the currency because now value has been created. To paint a picture, it would be like preferred dividend holders getting a ridiculous common stock dividend that diluted the company enormously while the rest of the common stock shareholders got nothing. All they are doing in the long run is dilluting the currencies.

The party is long from over in the current gold bull.