Gold Bulls Expand as Billionaire Paulson Says Buy

Gold traders are getting more bullish after billionaire hedge-fund manager John Paulson told investors it’s time to buy the metal as protection against inflation caused by government spending.

Twelve of 22 surveyed by Bloomberg expect prices to gain next week and five were neutral. Paulson & Co. is already the biggest investor in the SPDR Gold Trust, the largest exchange- traded product backed by bullion, with a stake valued at $2.9 billion, a Securities and Exchange Commission filing Feb. 14 showed. Investors have 2,389.7 metric tons in ETPs, within 0.2 percent of the record reached in December and more than all but four central banks, according to data compiled by Bloomberg.

Speculators in U.S. gold futures are now their most bullish since September after the Bank of England and Bank of Japan said they will buy more assets and the Federal Reserve said it was considering purchasing more bonds. Central banks are also expanding their bullion reserves, adding 439.7 tons last year, the most in almost five decades. They may buy a similar amount in 2012, the London-based World Gold Council said yesterday.

“The appalling state of fiscal finances of most industrial nations does lead to concerns about the possibility of inflation,” said Mark O’Byrne, executive director of Dublin- based GoldCore Ltd., a brokerage that sells everything from quarter-ounce British Sovereigns to 400-ounce bars. “Gold is a crucial diversification given the various risks out there.”

Bank of America

Gold rose 9.9 percent to $1,722.20 an ounce this year on the Comex inNew York. The Standard & Poor’s GSCI gauge of 24 commodities gained 6.6 percent and MSCI All-Country World Index (MXWD) of equities climbed 9.7 percent. Treasuries lost 0.5 percent, a Bank of America Corp. index (MXWD) shows.

Hedge funds and other money managers boosted wagers on higher prices by 57 percent since mid-January. They raised their net-long position by 8.6 percent to 173,172 futures and options in the week ended Feb. 7, the highest level since mid-September, Commodity Futures Trading Commission data show.

Central banks are keeping interest rates at or near record lows and expanding stimulus measures to spur growth that the International Monetary Fund predicted on Jan. 24 will be 3.3 percent this year, down from a previous forecast of 4 percent. Greece is seeking more aid on top of the 110 billion euros ($145 billion) awarded in 2010 and Moody’s Investors Service cut the ratings of six European nations on Feb. 13.

‘Build a Position’

http://www.bloomberg.com/news/2012-02-17/gold-traders-get-more-bullish-as-billionaire-paulson-says-buy-commodities.html

Greek Rescue Leaves Europe Default Risk Alive. (Denial is a wonderful thing) QB comments will be in parenthesis.

Europe is still struggling to avoid (pretend that) the threat of default as investors warned Greece will soon risk violating the terms of its second bailout in three years. (Watch for bailouts 3, 4 and 5)

Seven months of negotiations ended in the pre-dawn hours in Brussels with Greece winning (losing) 130 billion euros ($172 billion) in aid (more loans) it (doesn't)need to avoid a March bankruptcy (that is fairly certain regardless of the date). Any respite may prove temporary after it signed up to a program of austerity (screwing the public) and economic reform (pay cuts) aimed at slashing debt to 120.5 percent of gross domestic product by 2020 from about 160 percent last year.

Even with investors (Those who are in The Big Club) and central bankers(ters) chipping in to relieve the debt burden (chipping in? Are you kidding me? They are the recipients), economists from Citigroup Inc. (a name you can trust) to Commerzbank AG concluded Greece may (will) again fail to deliver amid a fifth year of recession, looming elections (who in their right mind would want to run for office now?) and social unrest (riots in the streets). The upshot could be the removal of aid (more loans) and renewed debate over the merits of fresh assistance (even more loans) before year-end as policy makers shift toward doing more to inoculate (isolate) the rest of Europe. (To make sure no banksters lose money)

“The bailout bandage (Tourniquet) is on, but it won’t take much to unravel,” said David Miller, partner at Cheviot Asset Management in London. “The euro zone has done its best to ensure that Greece will deliver (default) on promises (or be debt slaves forever to the banks), but there is considerable scope for backtracking on deficit reduction.” (meaning the Greek know they are getting the shaft)

Financial markets signaled doubt (actually they know for sure) the accord will (not) fix Greece’s travails (what is a Travail?) permanently or spell an end (That is spelled END) to the two-year debt crisis (that will end in default any way). The euro surrendered (is that like we give up?) initial gains against the dollar and European stocks fell from a six-month high. (Sort of like diving into an empty pool or jumping out of a plane and forgetting your parachute.)

(I mean this is easier that shooting fish in a barrel. For the rest of the nonsense go to the link below Queenbee).

http://www.bloomberg.com/news/2012-02-21/greek-rescue-leaves-risk-of-default-alive-in-europe-as-austerity-deepens.html