Pessimism towards the precious metal market intensified this week, as neither the ongoing drama in Greece nor the market crash in China could put a bid under bullion. It's inability to rally in such a 'risk off' environment exasperated bulls, and a break below USD $1140oz can't be ruled out. Despite that - the rationale supporting a gold position received a boost (unintentional) from PIMCOs Australian head of portfolio management - when he recently stated investors need to 1. Acknowledge the real risk-free rate of return is now negative 2. Be mindful of risk in instruments used for income generation 3. Focus more on expected capital price volatility of holdings 4. Ensure there is sufficient risk-factor and geographic diversification in portfolios Holding gold in a portfolio helps protect against all of the above, not that you'd know it now, with sentiment terrible, net long gold specs at their lowest level in a decade, and short positions at their highest level in years (see chart) It's brave calling a bottom in any market, but there's fertile ground for a rally (VIEW LINK)


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James Marlay

Fascinating situation