Here's What It Would Take To Get Some Major Gold Bulls To Turn Bearish


Photo: AP

There are a lot of luminaries in the gold community who will never turn bearish, because they’ve built a persona around being gold bulls. Peter Schiff is a good example of this. He’ll never be a gold bear because that stance would make him irrelevant.But, surprisingly, there are some gold bulls open to changing their mind, and going negative.

And in fact, any serious investor should think about what it would take to get them to change their mind (on anything, actually, not just gold).

That question was posed to panelists at an event at the World Gold Investment Congress.

MineWeb has the report:

For [Tom] Kendall [of Credit Suisse], the focus has to be on real interest rates, in particular those in the US. “If we get to a point where the Fed has managed to stimulate a reasonable level of inflation again in the US, where you have CPI around 1.5 – 2%, and it has done so in a measured and controlled way, then real interest rates would start to move up and some major challenges would be posed for the gold bull market.

This might be a little surprising for some, who still think of gold generically as an inflation hedge, but it makes sense. Controlled inflation is basically the antithesis of what markets seem to expect right now.

Others at the event said a pullback of sovereign debt fears would cause them to turn bearish.

One idea that we’ve suggested is that a move by China to seriously revalue the yuan would be a risk to gold bulls in the sense that such a move would slam the breaks on the global devaluation game.

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