Gold Disappoints Again - Gold Bugs Beware. The Inevitable Has Not Come

By: Larry Cyna | Wed, Dec 26, 2012
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The Price of Gold Stagnates

Looking at the chart of the price of bullion (Gold) one sees that the current price is almost where it was several months ago, and nowhere near the high of 2011. It is currently resting slightly above $1,650, which is just a bit weaker than it was a few months ago. Since it hit its high of $1,900, it has not come close to that high. It tested $1,800 a few times, but those weak efforts failed to come close to previous highs.

The End of The World As We Know It

On December 22, 2012, according to an ancient calendar, the end of the world would come.

To quote the ancient prophecy, "The sacred Aztec calendar is properly called the Eagle Bowl. It represents the solar deity Tonatiuh. The amazingly accurate calendar has been in use in various forms for more than 2,000 years. A Zapotec prophecy, based on the Eagle Bowl, states:"After Thirteen Heavens of Decreasing Choice, and Nine Hells of Increasing Doom, the Tree of Life shall blossom with a fruit never before known in the creation, and that fruit shall be the New Spirit of Men."

The 13 Heavens and 9 Hells were each 52 years long (1,144 years total). Each of the 9 Hells were to be worse than the last. On the final day of the last Hell (August 17, 1987), Tezcatlipoca, god of death, would remove his mask of jade to reveal himself as Quetzelcoatl, god of peace.

In the mythology of the Aztecs, the first age of mankind ended with the animals devouring humans. The second age was finished by wind, the third by fire, and the fourth by water. The present fifth epoch is called Nahui-Olin (Sun of Earthquake), which began in 3113 BC and will end on December 24, 2011. It will be the last destruction of human existence on Earth. The date coincides closely with that determined by the brothers McKenna in The Invisible Landscape as "the end of history" indicated by their computer analysis of the ancient Chinese oracle-calendar, the I Ching.

The Mayan calendar is divided into Seven Ages of Man. The fourth epoch ended in August 1987. The Mayan calendar comes to an end on Sunday, December 23, 2012. Only a few people will survive the catastrophe that ensues. In the fifth age, humanity will realize its spiritual destiny. In the sixth age, we will realize God within ourselves, and in the seventh age we will become so spiritual that we will be telepathic. "compiled by Dee Finney.

A bit difficult to read, but essential a lot of analysis and theory coming to the conclusion that the world will end on a certain day.

Prophecies of Doom for The Financial Markets, for Currencies, for Countries

In spite of these prophecies of doom, which like every other prophecy that has come and gone, December 22, 2012 was like every other day. Which brings us back to gold? We heard so much about how gold would hit $2,000 by the end of 2012. Many were prophesying $2,500 with a rise to $5,000 in short order. Well, the end of 2012 is upon us, and gold continues to meander.

It is a fool's game. Looking back to our warnings of February 2012 when we warned that betting on gold is a fool's gamble, and our other warnings including "Gold The Great Gamble of October 17, 2012, those that listened to the doomsayers, were shown to have followed false prophets.

As we have pointed out so many times, printing of currencies does not automatically mean that gold becomes more valuable. Accumulating national debts does not mean that gold automatically becomes more valuable, Having a large debt does not necessarily mean that currency is doomed. All of the other persuasive rationale of the gold bugs, are equally based upon flawed assumptions.

We have presented all of these persuasive analytical arguments before, and yet the gold bugs remain eager to jump at the scenario of doom and gloom. I am sure that readers do not wish to be again reminded of the common sense and logical reasoning as to why gold is not the ultimate haven of security, but ignoring reality and also ignoring the market, is done at one's peril. For those doubters, I have provided links back to previous discussions and all of those comments remain valid.

The Future of Gold

No-one knows where gold will wind up. Perhaps there will be massive inflation, which will make the price of gold worth more in terms of some currencies. Perhaps interest rates will shoot up to combat inflation, in which case holding gold will become very expensive because of these high cost of borrowing and therefore gold will fall. Perhaps the Chinese and Indian demand for gold will again start climbing rather than falling, making gold more in demand. Perhaps governments around the world will start again to accumulate gold for their treasuries. All of these and so many other factors will affect the price of gold.

Backstopping all of this, is the fact that demand for gold overall continues to rise because of industrial demand, jewelry demand will continue to grow from more affluent consumers and many more of those consumers, and the production of gold will not keep pace and is troubled by ever increasing costs.

Therefore, the price of gold will not fall to those historical lows in the $250 range. Demand is too strong and supply is too limited. In the short term, gold may fall because of demand factors, and the slowing of demand from so many gold funds. Weakness in the short term could easily happen, and those leveraged to buy gold would feel the pain. In the longer term, there is fundamental strength and gold will fluctuate in price, but certainly not in the upward trajectory that took it in an unbroken line to $1,900.

Buying Gold For Your Portfolio

Gold is better left to traders to buy and sell, and to funds who mirror demand from investors. Some gold in your portfolio is always a good thing, but like everything else, too much of a good thing, can get painful.



Larry Cyna

Author: Larry Cyna

Lawrence J. Cyna, CA

Larry Cyna

Larry Cyna, CA, is CEO and Portfolio Advisor to Cymorfund, a boutique hedge fund. He expresses his insights several times a week on his blog and offers a free newsletter which can be subscribed to here.

Mr. Cyna is an accomplished investor in the Canadian public markets for over 20 years, and has managed significant portfolios. He is a financing specialist for private and public companies, and has expertise in real estate and debt obligations. He has assisted private companies accessing the public markets, has been a founding director of public companies and is a strategic consultant to selected clientele.

He is and has been a director, a senior officer and on the Advisory Board of a number of TSX and TSXV public companies in the mining, resource, technology and telecommunications sectors, and the Founding Director of two CPC's with qualifying transactions in mining and minerals. He was an honorary director of the Rotman School of Management MBA IMC program, has completed the Canadian Securities Institute Canadian Securities Course & Institute Conduct and Practices Handbook Course, was a former Manager under contract to an Investment Manager at BMO Nesbitt Burns, a roster mediator under the Ontario Mandatory Mediation Program, Toronto, a member of the Institute of Corporate Directors of Ontario, a member of the Upper Canada Dispute Resolution Group, and the Ontario Bar Association, Alternate Dispute Resolution section.

He obtained his designation as a Chartered Accountant in Ontario in 1971 and was the recipient of the Founder's Prize for academic achievement together with a cash reward. He became a CPA in the State of Illinois, USA in 1999 under IQEX with a grade of 92%. He is a Member of the Institute of Chartered Accountants of Ontario and the Canadian Institute of Chartered Accountants.

He holds certificates in Advanced ADR & in Civil Justice in Ontario, Faculty of Law, University of Windsor, certificate in Dispute Resolution from the Ontario Institute of Chartered Accountants. Previous accomplishments are Manager of Cymor Risk Consultants LP specializing in Risk Management Assessment; CEO of Cyna & Associates specializing in mediation and ADR; Founder & Senior Partner of Cyna & Co, Chartered Accountants, a fully licensed and accredited public accountancy firm with international affiliations; and was a partner in a large public accountancy firm.

Mr. Cyna is well known in the Canadian Investing community. He attends presentations given by public companies to the industry on a daily basis.. These presentations are intended by the various hosting companies to present their inside story for the purpose of attracting funding, or of making parties more interested in acquiring shares of those companies. Being in constant communication in this manner keeps Mr. Cyna deeply involved in the current market and leads to numerous investment opportunities.

Mr. Cyna is currently a Director of Argentum Silver Corporation and Telehop Communications Inc.

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