GOLD HAS NOT LOST ITS SHINE

After reaching a high in the US$2160s gold started falling this week to a low of US$1190s before rebounding in late afternoon.

Has gold lost its shine? I think NOT. In fact, the case for gold has not been stronger. The world remains mired in sustainable debt levels (In January, China increased its debt by a whopping US$0.5 trillion!), global trade is in the doldrums (the Baltic Index has fallen more than 97% from its peak and lowest in recorded history), weak GDP growth (Japan's GDP just shrunk 1.4%), and poor PMI data (US and China PMI data is  less than 50 indicating a contraction).

Even more amusing is that just last week, Goldman made a case that gold could move higher but in the latest newsletter called for investors to short gold with a price target at US$1,100 per oz. Really? In a matter of days!?

My suggestion to investors of gold to adhere to the fundamentals which are clearly showing distress in global debt levels, and potential banking crisis in US (due to  a string of bankruptcies among shale oil producers) Europe (debt crisis and negative interest rates), Japan (negative interest rates with the highest debt level in the world at more than 500%) and China (ballooning debt levels and a weak economy).

Just as banks say that gold never earns a dividend and interest rate, and the Fed will continue to raise interest rates going forward. Here are some questions which you shoudl ask yourself:

1) Do Amazon and Facebook pay a dividend?
2) Gold does not pay any interest. So what happens when even bonds are showing negative interest rates and keeping your money in the bank?
3) The EU and Japan are moving into negative interest rates. Will the Fed raise interest rates in such a scenario, because it means a stronger US$ and making US made goods less competitive, harming the US economy further. How many more rate increases before the Fed go back into easing mode? Already all bets are indicating that the Fed will not increase interest rates at all in 2016.

I remain bullish on gold and silver, and related ETFs.

The above are just my opinion. Please do your won research as well.