A Few Chunks of Goldbug Kryptonite

30 Day Gold, through December 18th

Hold your hate mail Goldbugs…I don’t make predictions here on anything, nor do I particularly care which way the price goes today or tomorrow.  The recent sell-off in the yellow metal has brought out a ton of bearish sentiment this week, some of which I’ll post here…

First up, Doug Kass has a gold call in his annual 20 Surprises list for 2010…

The price of gold topples. Gold’s price plummets to $900 an ounce by the beginning of second quarter 2010. Unhedged, publicly held gold companies report large losses, and the gold sector lies at the bottom of all major sector performers. Hedge fund manager John Paulson abandons his plan to bring a new dedicated gold hedge fund to market.

This next one comes from Nouriel Roubini, writing at his RGE Monitor website…

“For the next two years, deflationary pressure is going to be dominant, and it is going to become a time bomb down the line if and when we keep monetizing large deficits. It may be too soon to hedge with gold… Unless we have high inflation, or…other risks like depression, gold looks toppy.”

Finally, this one isn’t quite an overtly negative call on gold itself, although these types of stories, in retrospect, can signal an inflection point during a speculative mania.  Put it this way, if I were majorly invested in gold, I’d rather see a lot less articles like this one…

Gold Is the New Tupperware, and You’re Invited to the Party – Wall Street Journal (12/21/2009)
The 1950s were big for Tupperware parties. The 1970s were hot for Mary Kay cosmetics. As this decade hobbles to a close, a new kind of social gathering is invading America’s living rooms: the gold party.

The thing to keep in mind is that a lot of the buyers who throw these gold parties are amateurs themselves cashing in on the gold trading frenzy.  I’m waiting for my wife to tell me that the cougars on Desperate Housewives are buying gold from each other or whatever. 

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These are just two and a half opinions on gold prices, but they are indicative of a growing and more emboldened chorus that we’re starting to hear more from as gold enters its third down week in a row.

Like any other asset class this popular, the increasingly vocal bearishness in the financial media is something we need to be aware of.

Sources:

Roubini Says Gold, Oil Look Overpriced  (Reuters)

The Gold Bubble and the Gold Bugs (Project Syndicate)

Kass: 20 Surprises for 2010 (RealMoney Silver – sub req)

Gold is the New Tupperware  (WSJ)