The Bears Have Nothing Else To Do But Buy Gold

By Dr. Duru

December 8, 2005

Another Fall season has come and gone and no economic calamity came to separate us from us our economic bliss. The bears are getting fewer and fewer, but the diehard pessimists insist that disaster is still right around the corner. They almost got what they wanted when the market swooned towards lows for the year in October. But now six weeks later, the market has snapped right back up - continuing the time-honored tradition of churning a lot but doing little advancing. Frustration around for everyone.

But even as the dollar remains strong, the economic numbers come out relatively healthy, and the Fed continues to slowly raise interest rates, the bears have been buying up gold to highs not seen since 1981. What gives? Must we always have a conundrum lurking in the markets somewhere? Did the bears get tired of talking and finally decided to do something like buy up a calamity-hedge like gold?!? The gold bugs are making a huge bet and someone will be proven wrong in 2006. I can no longer make sense of it, and I sold a recent gold position (in NEM) into Wednesday's rally. While I remain a fan of gold, I honestly cannot explain a sound rationale for investing in it except that its price is going up. So, if the precious metal takes another tumble, I will certainly be there to scoop right back in. (read my disclaimer here). Until then, I will wonder why the bears do not just focus on shorting the housing stocks...

As always, be careful out there!

DrDuru, 2005