U.s. Non-farm Payrolls Report: Terrific Opportunity To Buy Gold From Momentum Traders

The Elevation Group Don't Buy Gold as an Inflation Hedge

*2008 computes gold's price until November 2008, when QE1 was announced We have gone over some of the reasons we believe that gold has risen over the last decade in a previous article , but the point here is that quantitative easing is NOT needed for gold to rise in price - gold's initial bull market showed very strong price gains without any Fed easing. So the mindset that tapering will finish off gold is simply not based on historic fact. The Fed is Not Actually Cutting the Money Supply The second error in the current short-term trading reaction to the Non-Farm Payrolls report is that is that tapering does not reduce the money supply. (click to enlarge) Source: Sprott Asset Management The wonderful chart above by Sprott Asset Management shows the real implications of taper. Stunning right? The so called "taper" is not a reduction in the money supply as the market seems to think, it is simply a reduction in the growth of the money supply. It's pretty much the same as a "Congressional Budget Cut" - you're reducing the increase of your spending. The money supply as recognized by the Fed's balance sheet is still growing at parabolic rates compared to historical growth - not much of a reason to sell gold. What Should Gold Investors Do?

Until its debt has fallen significantly and the company can make up for the lost future production in its defunct Pascua-Lama project, it is best to put this miner on the backburner. Final thoughts Gold is commonly portrayed as a great inflation hedge, but the reality is that miners are better inflation hedges. BHP Billiton has diversified operations and a strong dividend that is far above the current U.S. inflation rate of 0.96%. Rio Tinto is another option, but its operations are heavily dependent on iron ore.

Soros Buying Gold as Record Prices Seen on Stimulus

Armel Leslie of Walek & Associates, a spokesman for Paulsons fund, declined to comment. Paul Touradjis Touradji Capital Management LP sold all of its 82,000 shares in the SPDR Gold Trust in the third quarter, according to an SEC filing. Lone Pine Capital LLC, the hedge fund run by Stephen Mandel Jr., cut its stake by 31 percent to 2.6 million shares, and Dan Loebs Third Point LLC lowered its bet by 10 percent to 130,000 shares, filings showed last week. Officials from all three companies declined to comment. Nine Strategists While some investors expect stimulus to devalue currencies, the median of nine strategist estimates compiled by Bloomberg show the U.S. Dollar Index, a measure against six major trading partners, will average 82.8 next year, from 80.9 now. Steven Englander, Citigroup Inc.s head of G-10 strategy, said in an interview this month that the currency market is signaling it isnt yet convinced the Federal Reserve will fulfill its pledge to pump record amounts of cash into the economy through 2015.

Gold: Time to buy now?

Gold buyers sell as quickly as they buy Gold got a boost last week after Fed chairman Ben Bernanke said U.S. monetary policy will remain "highly accommodative" for the foreseeable future. The remark lowered expectations that the Fed will begin to cut back on its $85 billion-per-month bond-buying program this year. "I think the Fed is being overly optimistic and won't get around to tapering this year," said Chuck Butler, president of EverBank World Markets. "If that's the case, then I think gold will really start to rebound." Butler said gold prices could climb back to $1,450 an ounce if the Fed delays tapering. But he cautioned that the market has been extremely volatile and that further declines cannot be ruled out. He noted that the cost to bet against gold, by shorting, has increased recently. That suggests that speculators are becoming less convinced that gold is headed lower.