Too Many Bears in the Woods for Gold: Gero

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Dec. 26 (Bloomberg) -- Alan Knuckman of Trading Advantage and George Gero of RBC Wealth Management, discuss the dismal year gold had and the possibility of a golden rebound. They speak on Bloomberg Television's “Market Makers.” (Source: Bloomberg)

The senior vice president at rbc of management joins us by the phone.

Paint the picture for us here.

What went so wrong for gold this year?

A lot of things went wrong for gold this year.

Mainly went went wrong was the surge in the stock market.

Asset managers, fund managers all over the world tried to get in on a winning move, and the winners have been the stock market hands down.

Open interests in gold contracts , exactly november, say, of last year, or 410,000, and today they are 381,000. all of that open interest went into other well performing assets.

Gold is down 25% for the year.

Open interest, we are looking for those long positions.

I want to bring in alan from trading advantage, joining us.

From a trading perspective from a technical perspective, where is gold -- from a technical perspective, where is gold?

We took it out by a dollar or so but we saw a bullish emergence.

In the market, the volatility did not make new highs even though the gold made new lows.

From the risk-reward standpoint, i'm loving it here.

I'm the king at options and the picture options for june to position for when this comes back, because it has fallen so far out of favor that there is a big opportunity here.

When we look at demand for gold, especially as we had in the 2014, are you expecting the lunar new year to stoke demand for the metal from china?

Yes, much more so from china than anywhere else.

China has become a very important trader in gold.

This shanghai exchanges trading gold.

They are telling the trading hours to coincide with the comics trading hours so they can share liquidity.

And also, more important, gold is sort of undervalued now while it may have been overvalued earlier.

I agree with what i just heard, and i think that there is going to be a opportunity going forward next year for gold.

Is that enough to make up for the lack of demand from investors who, for instance, exchange products backed by gold?

And india, because indian imports could be down 70% this quarter.

India taxed gold tremendously.

There are shops in india on strike against -- they are selling gold, but all these people decided simply to move their big business to dubai.

Dubai mercantile exchange has been doing risk business in gold -- brisk business in gold.

The contract in mumbai a kilo contract and we think that is going to eventually take off in a better as india pares down its taxes.

After all, the shops don't close . they sell sulfur.

That affects -- they sell silver.

That affects underlying imports.

We saw in 1923 just a few years ago, what kind of upset are you expecting here?

I am looking for gold to recover back at 1500 at minimum.

Gold is just now an asset class that people participate in.

Your guests talked about how the stockmarket has been the shining star, but people still want to have money in different asset classes to be positioned as a hedge.

People are not going to forget about gold.

1300 is the near-term target.

We were at 1420 just in august.

You have to look at the number speculators heavily short.

That is usually a positive contrarian sign that the easy money -- sorry, the small money is looking for this market to go back down.

Selling now is -- you sell now at 1200 and there's not a lot of downside left, in my opinion.

I agree with him.

I think he is right on.

My team for the past 2 weeks has been to many pairs in the woods.

-- too many bears in the woods.


If there are too many bears in the woods, where would you look?

I would look at copper.

Copper has been a great performer while gold was down 25 and a little bit more percent, copper was down five percent for the year.

Copper is now in a backwardation.

The nearby contract is much more expensive than the further out contract.

It means prompt deliveries are going to be needed very soon in the first -- you have got a tremendous amount of reconstruction do in many parts of the world due tsunami's, bad weather, economic and political problems.

Copper will continue to be very interesting.

Copper warrants are closely held as well.

And used refinancing deals in

This text has been automatically generated. It may not be 100% accurate.


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