Steve McDonald: The Chinese imported six times as much gold in the first 10 months of 2013 than they did in all of 2012. And they are converting paper gold to small pieces of bullion. They want physical gold only.
They have literallyemptied some gold storage facilities.
I hope by now everyone is aware that the SPDR Gold Trust (ETF)(NYSEARCA:GLD) – which the West loved for years but is now selling like it’s on fire – is out of vogue, and this selling has put huge downward pressures on gold prices.
And while we were selling, Asia as a whole imported 23% more gold in 2013 than in 2012. This official number is assumed to be low because the Indians are smuggling gold to get around official curbs on importing it. In 2012 India was responsible for half of the gold buying in Asia.
And from a technical position, gold looks very good. In a Barron’s article, Jeff Gundlach of Double Line Capital called for at least $1,350 an ounce this year.
Sentiment about gold right now is as black as night and that’s always a good contrarian sign. Buy when everyone is negative. The herd is never right.
The technical and contrarian indicators, along with the increased focus of the money press on gold miners – actually, any kind of miner – could be enough to move the metal. We don’t need another crisis to see a decent return on gold in 2014.
We already have about a 3% move this year, and if the adage “Buy when there’s blood in the streets” has meaning for you, it doesn’t get much bloodier than gold in 2013. There is more upside here.