Don Coxe: “The Collapse In Gold” – While Gold Regroups, Central Bankers Will Continue The Inflationary Process

\”BullMarketThinking.com\”

In response to the outright fear and panic displayed in the gold market today, legendary investor Don Coxe, Chairman of Coxe Advisors LLP, and former advisor to the $540 billion BMO Financial Group, stepped up and shared a reaffirming statement for battered gold bulls.

Don indicated that, “Gold was ready for a pause. While it regroups, the politicians and central bankers will continue to devote themselves to making it absolutely necessary [to own]. Because of our confidence in those money-printers and deficit ‘increasers’…we expect to rebuild our gold exposure…and therefore believe gold’s peak price will eventually be far above its previous high.”

Here are Don’s comments, in their entirety…
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THE COLLAPSE IN GOLD

Don Coxe
Chairman, Coxe Advisors LLP

There was no overt hint of the impending carnage as the First Quarter ended with Gold trading at $1604 an ounce—down from the high trade this year of $1695, but not suggesting that a stunning, record-breaking plunge was coming with April Showers.

On Friday April 12th, we made scant mention of something happening in gold in a Conference Call devoted to the legacy of Margaret Thatcher. Thereafter, Gold’s dive took investors by surprise, as it fell from $1550 and briefly broke $1500 before closing at the somewhat suspicious prices of $1501.

But the real drama was saved for Sunday evening, as Asian markets opened and gold resumed its swoon, falling quickly to $1440. As Europe and then North America opened for trading the plunge became a full-blown panic, reaching $1355 by mid-Monday-morning before rallying weakly.

By then, media commentators were issuing a flood of explanations. Among them:

• oil prices had been declining for weeks and both Brent and WTI had dropped sharply in recent trading; when the commodity that has
historically been the most important inflation generator starts contributing to falls in CPI, can gold be far behind?

• industrial metal prices had fallen sharply in response to evidence of slowing in China; on April 15th, China announced its quarterly GDP growth had not been 8% as initially estimated—just 7.7%.

• grain prices had been softening in response to USDA estimates of record-breaking corn crops—with further robust numbers for
soybeans and wheat.

But the most crucial rumors were about Cyprus. The mini-nation with the 61st largest holding of gold was going to have to sell its treasure to meet its pressing financial needs. That was enough to set off rumors of a concatenation of PIIGS sales of gold—to cover the deficits of Portugal, Italy and maybe even Spain.
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