Why I Won't Sell Turquoise Hill

At a time when it appears there is nothing to stop the disintegration of the commodity bear market, my outlook for Turquoise Hill (NYSE:TRQ) remains strong.

My reasoning is I believe commodities are closing in on their lows in general, and are likely to begin a rebound in the not-too-distant future. But even if there is more downside to come for an extended period of time (meaning about a year or so), I don't see it having a negative impact on those holding a position in Turquoise Hill for the long term. That's because of the timing of the completion of the second phase construction at its flagship property Oyu Tolgoi.

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Bank of America (NYSE:BAC) Says Unwinding of Reflation Trade Could Accelerate

After the announcement by Ben Bernanke concerning implementing another round of quantitative easing, investors have had a nice bump up in profits as expectations that inflation would rise began to be fulfilled. Bank of America (NYSE:BAC) says that could be temporarily halted going forward.

“Reflation trades have gone a long way since Jackson Hole, and positioning alone makes them vulnerable. We estimate that the aggregate position of QE2/reflation trades now sits at a three-year high. The unwinding of the reflation trades that started with the sell-off in Treasuries is now spilling into the cyclically sensitive assets, may have more room to go,” said Bank of America.

“The size of these positions no doubt reflects the strong consensus that easy U.S. monetary policy and emerging market decoupling will keep U.S. interest rates low and global growth strong,” the bank wrote in the note. “However, vulnerability is beginning to show, and further position unwinding seems increasingly probable as we had into year-end.”

Assets which benefit from inflating the economy through printing money, including commodities in general, and gold, have fallen back since November 3.

There are other factors involved, of course, like the EU sovereign debt crisis and uncertainty as to China and how they'll battle inflation.

Gold Futures Settle at $732.80 on the COMEX Division of New York Mercantile Exchange

Even though gold futures for December delivery settled at $732.80 an ounce on the Comex division of the New York Mercantile Exchange, a drop of $13.70, taking into consideration the current economic climate, it's not too bad, as most market forces are working against the yellow metal at this time.

Even so, we may test new recent lows before we see gold start to rise steadily again.

Deleveraging continues to strengthen the U.S. dollar, and gold probably won't be behaving like it normally does until that starts to unwind at a mature level. That's still a relative unknown, even at this stage of the economic crisis.

As the crisis starts to reach its apex, we should also help gold gain in price. We may be nearing the center of the storm in the U.S. soon, but it's impossible to tell because we really haven't any past experience to measure it by. It does seem that we're nearing the eye of the economic hurricane, and that will bode well for gold.

To me the important question for gold isn't when we begin to reach bottom, but how long we're going to stay there. It looks like it will be for some time, and that will definitely be positive for gold prices going ahead.

Gold Down to Lowest Level in 21 Months

The sell-off of gold continues, as institutional investors scramble to cover the loans being called for bad investments.

Today's prices fell to a 21-month low, and may end the day at its lowest historical weekly performance.

With the gold and general commodity sell-off, the normal market reaction to poor economic times isn't being played out, as various institutional funds look everywhere for cash. It has also uniquely strengthened the U.S. dollar because of commodities being denominated in it.

Gold today dropped as low as $681 an ounce early in the session on the New York Mercantile Exchange, although rebounding later to $708.70. That's the lowest gold has been since January 11, 2007.

There's nothing gold investors can do but wait for the unwinding of the positions held by large institutions before things will revert back to normal measurements.

The problem is some of the financial instruments are so complex that we have no idea of the timeframe involved before the positions are covered.