surfdude

“We follow the big trend. Gold isn’t the trend. Out of more than 200 nations, how many countries have bought bullion?” I wonder what Mr. Lee sees as the big trend? It's a pity he doesn't say. The banks with the largest foreign reserves have been buying gold - China, Russia, India. I lived in Korea in 1997-98 during their so called IMF crisis when the won went through a major devaluation. It was common for Koreans to donate their jewellry to the government which was melted down and used to help pay their debts. I wonder if they would hope for a repeat of this if/when they have problems in the future?

Here is a central bank that is bearish on gold, Korea's central bank sees little reason to buy gold to diversify out of US dollar holdings. They hold the 6th largest foreign reserves. Here is the article from Bloomberg: Bank of Korea Sees ‘Illusion’ in Gold, No Cash Return (Update2) Share Business ExchangeTwitterFacebook| Email | Print | A A A By Kim Kyoungwha Dec. 8 (Bloomberg) -- The Bank of Korea, diversifying foreign-exchange reserves away from a falling dollar, said additional gold holdings aren’t attractive as most other central banks aren’t buying and the metal offers no cash returns. “There’s an illusion in gold,” Lee Eung Baek, head of the bank’s reserve-management department, said in an interview. “We follow the big trend. Gold isn’t the trend. Out of more than 200 nations, how many countries have bought bullion?” Gold surged to a record this month after central banks including India added more of the metal to reserves, while funds and individuals boosted purchases to protect their wealth against the weaker dollar and potential increase in inflation. “Holding gold as part of reserves makes sense in terms of diversification, but I don’t think many central banks want to balloon their holdings with it,” said Jerry Yoshikoshi, a senior economist with Sumitomo Mitsui Banking Corp. Gold for immediate delivery, on course for a ninth annual gain, touched an all-time high of $1,226.56 an ounce on Dec. 3, and has gained 31 percent this year as the dollar has dropped 6.7 percent against a basket of six currencies. The metal traded at $1,153.60 an ounce by 12:37 p.m. in London. South Korea’s reserves -- the world’s sixth-largest after China, Japan, Russia, Taiwan and India -- rose to a record $270.9 billion in November as the central bank intervened in the foreign-exchange market. Central banks intervene by arranging purchases or sales of foreign exchange. ‘No Cash Returns’ “Like other central banks, we have been increasing the types of currencies consisting of the reserves outside the dollar,” Lee said yesterday by phone, without identifying the currencies. Gold “offers little value,” with “no cash returns,” he said. The Asian nation holds 14.4 metric tons of gold, equivalent to 0.03 percent of total reserves, according to figures from the Bank of Korea. That compares with the average of 10.2 percent held by central banks worldwide, according to data from INTL Commodities DMCC in October. The dollar has weakened this year as the Federal Reserve kept benchmark interest rates near zero percent since December 2008 to revive lending after the worst financial crisis since World War II. Record U.S. government borrowing has also driven investor concern that the currency may be debased. ‘Slim Chance’ “Since India and Russia with large reserves bought gold, there’s speculation that Korea might buy it too,” Lee said. “But we are not classified in the same category. There’s a slim chance that we will buy gold” from the IMF, he said. Since the end of September, India, Mauritius and Sri Lanka bought more than half of the 403.3 tons of gold that the International Monetary Fund plans to sell to bolster its balance sheet. Bank Rossii, Russia’s central bank, also increased its gold holdings by 2.6 percent in October. Central banks will become net buyers of gold this year for the first time since 1988, according to New York-based researcher CPM Group. Analysts at Societe Generale SA, Barclays Capital and Bank of America Merrill Lynch have forecast more state purchases. “The volatility on gold is too big,” Lee said. “And once gold is purchased, it’s just kept in a safe and is not put up for sale even if prices rise.” Many central banks “remember bullion’s ultra-bearish trend in the nineties,” Sumitomo Mitsui’s Yoshikoshi said. Gold tumbled as low as $251.95 an ounce during the decade, in August 1999. “The recent rally is, for me, too much in an environment where aggravated inflation is hardly expected in the coming years,” he said. South Korea has reduced its holdings of Treasuries to $38.8 billion at the end of September from as high as $72.8 billion in February 2006, according to U.S. Department of Treasury data. This year, its holdings climbed $7.5 billion as the nation’s reserves increased. To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net Last Updated: December 8, 2009 07:57 EST

I think that consolidation could come in the spring (April) with Gold taking a break and trading lower until next October/November.

Here is the GS target figures from the article: We therefore raise our gold price forecasts to $1200/toz, $1260/toz, and $1350/toz on a 3-, 6-, and 12-month horizon, respectively, with a 2010 average price forecast of $1265/toz and a 2011 average price forecast of $1425/toz. While an earlier than expected tightening of US monetary policy presents a substantial downside risk to gold prices in 2010 and 2011, we believe the near-term risk to our gold price forecast is skewed to the upside. So GS see small incremental increases over the next 12 months.

It seems they are a bit slow with catching up with the action

Thanks for pointing that out Wren. I have seen the picture many times but did not realise those are the actual numbers Sinclair is calling for gold's ascent. I think we could see the price move up a few rungs of that golden ladder by spring 2010.

Taken recently from a Reuters article: Goldman Sachs said it sees prices at an average $1,265 an ounce in 2010, rising to $1,425 an ounce in 2011. It said low U.S. interest rates will support gold. This seems quite a moderate forecast predicting it will only go up some $50-60 from here for all of next year. GS trying to signal to investors that the high is in, ulterior motives?

What are the other 'Magic Numbers' Sinclair is calling for?

Following Armstrongs' recent paper on gold... Now that we have made fresh highs in December we can expect a rally going into April. Armstrong gives a turn date of April 16, 2010. This would be followed by a 6 month correction with a low in Oct./Nov. 2010. So I expect strong movements with gold over the winter with a move towards US$1380 - 1500. Looking at Wren's chart, December, Jan. and Feb. are strong months for upward price movements in gold so this would seems to fit.

Thanks for that.

Some good comments here and your view is similar to Martin Armstrongs as evidenced in his recent article on gold. He stated that if gold makes new highs after November then we can expect a rally going into April 16, 2010 at which time there would be a sell-off (my target $1380) . With a big change in trend in Oct/Nov 2010 with a 12 month trend afterwards (upwards in this scenario). If the market is unable to make fresh highs after November then there will be a decline going into April, followed by an explosive rally into October 2010. This would be followed by a downward trend for 12 months. So a temporary high sometime in 2010-11 (April 16 2010 or Oct/Nov. high). Remember his economic confidence model signals major turn dates but does not specify if they are highs or lows. So if this November Gold continues we are off to the races until next April.

Can you tell me where you get the gold spot price in different currencies? I am particularly interested in HKD as I live there. Cheers.

For an interesting look at the Royal Canadian Mint and a bit of Canadian humour vis-a-vis Rick Mercer check out this November installment of the Rick Mercer Report where he visits the Mint in Ottawa. RMR visits the mint scroll down the list of videos on the left and click on the 7 minute video of RMR visiting the Royal Canadian Mint.

Are the nuggets "collectables" because they have a different kangaroo image each year whereas the maple and the kruggers don't change? Here in Hong Kong when you want to buy/sell gold you go to a bank and exhange the currency the same as if you were exchanging Euros, $US or any other currency. Is this the same in the UK, that is, do the banks buy/sell gold? Or do you have to go to a PM dealer to buy coins or bars?

Can anyone answer why Aussie 1oz nuggets have a $US 50 premium over other coins like maples and kruggers? Is it because they have a higher % of gold in them?

I did a wiki check on Martin A. Armstrong and found he is an expert on cycles and developed his own cyclical theory. He is also in prison for conducting a ponzi scheme on Japanese investors. Does anyone know how he picked the 20th of April as a significant turn date?

The best part I liked about this video was at the end when he was talking about developing contacts/links with people in Asia/China with a picture of Hong Kong on the screen. Living at the gateway to China could be as good as gold in the future with the collosal shifts occuring.

I picked that book up in the Spring 2008 and found it enlightening and deeply informative in explaining key concepts like the history of fiat currencies, the John Law printing factory, fractional reserve banking, American indebtedness and his list of possible scenarios to play out. Definately a good read.