Well I’m not hoping for a TO yet. I’d rather see the project...

Well I’m not hoping for a TO yet.

I’d rather see the project developed and this game of poker between the US and the rest of the world played out to its full extent.

You really need to wonder why the short interest in gold is at record highs at the moment. My feeling is because it it’s at the front and centre of the trade/currency wars. I don’t think people trust the Euro zone at the moment, nobody trusts the Yen. The Yaun is more powerful than people think and China holds a lot of the cards when it comes to the dollar and the value of US debt. In fact China holds $US 1.17 trillion in US treasuries. Japan holds US$1.05 trillion and has been souring on US treasuries of late due to rising hedging costs.

China is the second biggest holder of US debt after the Federal Reserve. Foreigners own $US4 trillion of the total $US 14.7 trillion of outstanding US treasuries.

China could use the “nuclear” option if it wanted and sell off US notes at a rapid rate sending treasury yields up even faster than they are currently rising, ie they could put upward pressure on US interest rates which has the potential to blow up the US housing and stock markets, but they don’t because the Chinese are good at playing the long game.

The question one needs to ask oneself is, if yields on US treasuries are so attractive compared to yields on other sovereign bonds why are US treasury yields continuing to rise? Eventually high bond yields should attract money from places where equivalent duration bond yields are lower, places like the Europe and Japan and places like the US stock market for example.

Why short gold? The only reason I can see is because they want money to flow back to bonds and not find an alternative safe haven. I would also go as far as to say gold has performed very well considering the old chestnut that they drag out, which is true, it has no yield. US 10 year bond yields have more than doubled since mid way through 2016 (ie gained more than 100%) while the gold price has lost about 10%. I see this as pretty impressive performance against these rising yields considering gold doesn’t yield a thing. That is a testament to its insurance appeal.

Gold is as solid as it has ever been, it’s just the sentiment that is piss weak. Not surprising considering the record shorts in paper gold markets.

WAF’s job is to go out and mine gold and mine it cheaply and forget about all the nonsense that will eventually resolve itself and gold will continue to perform strongly against most macro factors, forces and shocks, ie negative bond yields, rising rates, falling currencies etc etc and all that GUMPF.

Don’t get worn down into selling this stock cheap to the first opportunist that comes knocking, we’ll make much more playing the long game IMO. Let them try and buy the mine and the cash flow if they want, because they’ll need to pay a lot more for that. Esh

Eshmun