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PCTEL, Inc. Message Board

  • commandor58 commandor58 Apr 9, 2013 2:44 PM Flag

    Japan and gold

    Because BOJ increased their QE, gold last Thursday (4/4) bottomed (so far) at $1539-a 10 month low. For that reason, I bought a couple gold stocks, ABX and GG. Previously, I was expecting a $ rally to take gold down to $1250-$1300. But the BOJ's action and recent M2 growth of $60 billion in the last 4 weeks vs being flat the prior 12 weeks-the more money sloshing around the world the higher probability some of it will find its way into gold and future inflation-which is the announced objective of the BOJ.

    On a mechanical basis, if BOJ is going to buy $80 billion/month of Japanese bonds, what are the sellers going to buy with the money they get from the BOJ? At the margin, since higher inflation is one of the BOJ's goals, then inflation hedges (gold) would be one idea. As of 4/8, gold did hit a 33 year high in terms of Yen-I expect that to continue. Also, in a backdoor sort of way, the BOJ has declared war on the ECB by weakening the Yen vs the Euro. An ECB response of more easing, including "active" QE could be forthcoming later in the year-also bullish for gold.

    So, other than staying with NG positions, I'm a buyer of gold stocks on weakness, perhaps a retest of $1540-$1550.

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    • Sounds good. I have a question commandor. Do you still own KTCC? Would you sell if it runs up before earnings? Do you still see them being a takeover target.

      One other question, do you follow biotechs. I don't, but have friends who do and they are very excited about CLDX. What do you think?
      Thanks as always.

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