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That is the big question anyone thinking of taking profit should be asking themselves, sell gold in exchange for what?

 

IMO we are just getting started.

 

Gold Price Prediction

 

By James West

MidasLetter.com

Tuesday, October 6, 2009

 

The breaking of the old record high price for gold today is no surprise to long-time critics of American and thus global financial policy. Regardless of how much spin you can generate from a compromised media, the laws of supply and demand re-assert themselves inevitably. Will this bring the mainstream investor crowd any closer to the understanding that the gold standard is precisely that, and has not been diminished but merely obscured by the powerful marketing forces of the United States Treasury and her feckless whoring sister, The United States Federal Reserve?

 

Not likely. When anything, be it stock, bond, currency or commodity, reaches a new high, the impetus for selling into strength and taking profit off the table are enhanced dramatically. With gold’s new record high, there are plenty of holders of bullion who started acquiring it in the first years of the millennium who are now sitting on profit equivalent to 3 times the money.

 

The question is, however, sell gold in exchange for what?

 

Certainly trading gold for U.S. dollars is akin to forward selling gold at an incrementally lower price. Anyone smart enough to own gold since 2001 is unlikely to be so silly.

 

Renmibi might seem like a good trade. The only problem with that is you can’t easily spend renmibi at Home Depot or Safeway or Nordstrom.

 

No, there’s really no substitute for gold at this point in the global currency landscape. And so, the normally present impetus to sell and take profit has been castrated by the lack of anything else capable of retaining its value.

 

Some consideration need now be devoted to the future price potential of gold. Gold began its bullish incline immediately following the dot com bust, and, spurred again by the events of 9/11, has gained, as of today, an average of $87 a year since then. Barring any real change in global fiscal policy, such as an end to the practice of over-leveraging asset bases and bastardizing currencies through sustained deficit spending, it is unlikely this pattern will ease.

 

Since the United States has forced itself, and by extension, many of its allies, into what would appear to be decades of deficit spending, we can expect this average rate to continue, at a minimum for the next ten years. That puts the gold price closer to $2,000 an ounce in ten years than to $1,000 an ounce.

 

Those numbers also make the more outlandish predictions, such as $5,000 an ounce and, most improbable of them all, $10,000 an ounce, seem a little less ludicrous, and maybe even likely.

 

In the absence of anything of equal or greater ability to retain value, all of the holders of bullion have no incentive to sell. If anything, the reasons for acquiring gold in the first place are the very same reasons for hanging onto it. So the normal price suppression effect of profit taking is neutralized.

 

The reasons for gold’s ascent is universally acknowledged to be the saturation of the global economy with exponentially titanic amounts of U.S. Dollars, which the American government now prints without purchasers of its debt. Indeed, the Federal Reserve, nominally the beneficiary of U.S. debt sales, is now a buyer. So not only has the dampening effect of profit taking been removed, but the fundamental drivers for the northward trajectory of gold’s ascent has been intensified during the last several years.

 

We know beyond doubt that the mainstream investing public are like so many sheep, following the soiled derriere in front of their noses in the subconscious conviction that there is always greener grass just ahead. We are at the point now where even the alpha sheep leading this wayward flock through increasingly barren badlands is about to experience an epiphany. There is no green grass left. The only grass worth having is the golden straw they left behind in the manger. Upon their return, however, the now starving, homeless and hungry sheep will discover that all the gold has been spoken for, and if they want to survive, they are going to have to pay dearly for a bale of golden straw.

 

And, since the population of sheep FAR outnumber the population of crafty foxes who have been carefully and judiciously squirreling gold away for the last decade, the effect of this flood of demand is going to see gold blast through $2,000 with ease, in much less than ten years.

 

So where is the price of gold going?

 

Much higher.

 

How fast?

 

At a minimum rate, it will increase by $87 a year in price, for at least the next ten years. At a maximum, the sky is literally the limit.

 

SOURCE: http://www.midasletter.com/commentary/0910...-prediction.php

 

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From front of Kitco page.

 

post-1672-1254972174_thumb.png

 

For the first time in ages I checked a Nadler article and clocked him mentioning Kitco starting up this new Kitco Gold Index. http://www.kitco.com/kitco-gold-index.html#RT Gold / $ Index.

 

Now, I'm sure it's a useful and relevant chart tool to use, but the way this is being pushed seems to be along the lines of 'no, gold is still no good - don't buy it'. FFS - Kitco and Nadler!

To be fair, it's just reporting data (though their method of calculation may be up for debate). If gold went down in USD but up in buying pressure it would be saying "Gold still considered a good bet by the market". I notice USD went below 76 for a while.

 

 

I was reading an interesting piece of research today from one of the banks. It said many of the majors were substantially lagging the gold price and still had lots of room for appreciation given they still trade at a discount to their old March 2008 highs...

If you want exposure to a basket of them, try AUCO (ETFX GOLDMININ ETFX RUSSELL GLOBAL GOLD FUND) from ETFS Securities.

 

 

Would be too many threads.

 

Just call this one "Gold thread" and theres no problem :rolleyes:

True. The whole site's been a bit weird lately. I don't know if it's because of the Mayan Calendar, a full moon, a bradley turn date, cosmic rays, alien mind control, sunshine, moonlight, good times or the boogie but it's too early to blame it on the format of the gold thread.

 

 

 

My post count overtook the gold price yesterday. Now gold has fought back.

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Yes, silver is much more vulnerable. But I don't want to jump in and out this year partly to keep my tax simpler. If silver drops back to €10 I will buy some more.

 

Otherwise I'm just going to sit back and watch for the next few months.

Don't get me wrong... I wouldn't want to jump in and out of silver also. Like you I am very bullish on the long term prospects of silver, but also a little nervous about the short term. Silver looks vulnerable to a manic episode in the market a la Bubb where we could easily see a sell-off in near everything. Given that investors are so confused and divided about the macro outlook, not to mention the state of the real economy, the odds are pretty good for a reversal at some point.

 

My strategy will not be to sell silver [i have a rather large position with about 30% of my worth in silver] but to switch to gold [where I already have an equally large position] if/ when the ratio nears 50. Others have a similiar strategy though I believe some are looking to swap on a more favourable ratio. I like to think of it as bringing in the weaker asset to harbour behind the golden gate. When the storm passes, I would go back out into silver and then at a profit [accumulated ounces] as the ratio would have likely risen to near 80 in the event of a sell-off. I would also put cash reserves into silver if/when the ratio went back to this level.

 

More a case of hedging than trading.

 

100% uncertain. :rolleyes:

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Don't get me wrong... I wouldn't want to jump in and out of silver also. Like you I am very bullish on the long term prospects of silver, but also a little nervous about the short term. Silver looks vulnerable to a manic episode in the market a la Bubb where we could easily see a sell-off in near everything. Given that investors are so confused and divided about the macro outlook, not to mention the state of the real economy, the odds are pretty good for a reversal at some point.

 

My strategy will not be to sell silver [i have a rather large position with about 30% of my worth in silver] but to switch to gold [where I already have an equally large position] if/ when the ratio nears 50. Others have a similiar strategy though I believe some are looking to swap on a more favourable ratio. I like to think of it as bringing in the weaker asset to harbour behind the golden gate. When the storm passes, I would go back out into silver and then at a profit [accumulated ounces] as the ratio would have likely risen to near 80 in the event of a sell-off. I would also put cash reserves into silver if/when the ratio went back to this level.

 

More a case of hedging than trading.

 

100% uncertain. :rolleyes:

I like to try and use my capital gains tax allowance in the swap, as the tax man treats swapping one to the other as a sale and rebuy with profits. That way I can stay invested and pay less tax when it finally comes time to sell.

 

 

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Brazilian Real doing well too. Check the 1 year chart.

 

http://www.kitco.com/gold_currency/charts.htm?USD

..... and the Aussie.

 

What I am waiting for is a reversal in the fortunes of the commodity currencies. This should then see new highs in the pog as priced in these currencies. No point waiting in Aussie dollars, or the like, if you are waiting for a dip in price to buy, as the currency is likely to weaken by a larger factor than gold would. Also, it is a bit of a shame if you bought on the peak [as my brother-in-law did in kiwi dollars] but then as the saying goes, "the bull market will rescue you".

 

aussie.gif

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Yes, looks like a weak US dollar story........ for now.

... and forever.

 

As Jim Sinclair always writes, the main influence on the USD price of gold is obviously the Dollar. Since all other currencies are children of the Dollar, gold prices in other currencies will reflect the Dollar price to varying degrees.

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Gold Analysts Are Far from Gold Bugs

 

Below we highlight a price chart of gold since the start of 2008 along with the median price estimates of gold analysts across Wall Street going out to 2013. The price estimates shown are quarterly through the first quarter of 2011, and then yearly from the end of 2011 through the end of 2013.

 

Based on these estimates, gold analysts don't seem too worried about a falling dollar and rising inflation.

 

post-3390-1255006413_thumb.png

 

Their current estimates for the end of 2009 are at $960, and they get up to $1,000 by Q3 2010 before progressively dropping all the way down to $800 by the end of 2013. This isn't to say that there aren't analysts expecting gold to be higher than it is now in the coming years, but the collective estimate is currently for the metal to head lower.

 

http://seekingalpha.com/article/165388-gol...gs?source=email

 

Another article in Seeking alpha appears far more positive, through moking Fortune magazine's recent attempt to pour cold water on the prospect of Gold.

 

http://seekingalpha.com/article/165472-bew...ng?source=email

 

It appears that the comments underneath both articles agree with most posts in this longstanding thread. Are there more goldbugs out there than we might think?

 

Any comments on either article?

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http://ftalphaville.ft.com/blog/2009/10/08...and-conspiracy/

 

Of gold coin craziness and conspiracy

Posted by Tracy Alloway on Oct 08 09:10.

In another instance of economics in reverse, the US Mint has suspended production of certain gold and silver coins because of “unprecedented demand.”

 

Here’s the Mint’s press release:

Because of unprecedented demand for American Eagle Gold and Silver Bullion Coins, the United States Mint suspended production of 2009 proof and uncirculated versions of these coins. All available 22-karat gold and silver bullion blanks are being allocated to the American Eagle Gold and American Eagle Silver Bullion Coin Programs, as mandated by Public Law 99-185 and Public Law 99-61, respectively. Both laws direct the agency to produce these coins in quantities sufficient to meet public demand. The proof and uncirculated versions of the American Eagle Gold and Silver Proof Coins are not mandated by law.

 

The United States Mint is working diligently with current and potential blank suppliers to increase the supply of bullion coin blanks, so it can offer to the public the proof and uncirculated versions of American Eagle silver, gold, and platinum coins in 2010.

 

Avid gold-watchers will remember that this is exactly what happened in August 2008. The official line at the time was that the Mint simply did not have enough blanks or planchets — the metal discs used to mint coins — to keep pace with demand. Nevertheless, the production-cut set off a wave of conspiracy theories.

 

Some of those — such as the idea that the sell-out heralded the imminent bailout of Fannie Mae and Freddie Mac — proved to be rather prescient. For others — like the idea that the US government was hoarding gold in preparation for financial armageddon — the jury is still out.

 

We have yet to see any specific conspiracy theories on the most recent production-suspension but we’re sure it’s only a matter of time.

 

In fact, we note that in general, the craziness surrounding gold coins is just getting, well, crazier.

 

To wit, the US Government bringing in the Secret Service to actively pursue 76-year-old gold coins:

PHILADELPHIA, Sept. 28 /PRNewswire-USNewswire/ — The Office of U.S. Attorney for the Eastern District of Pennsylvania has filed a civil forfeiture complaint against 10 1933 Double Eagle gold pieces, consistent with U.S. District Court Judge Legrome D. Davis’ order dated July 28, 2009. The pieces were surrendered to the U.S. Mint by the descendants of Israel Switt. In addition to forfeiture of the 1933 Double Eagles, the government asks the court to declare that, with the exception of a single 1933 Double Eagle monetized and auctioned for more than $7.5 million in 2002, all other 1933 Double Eagles are the lawful property of the United States government.

 

As detailed in the complaint, the 1933 Double Eagles are $20 gold pieces that were manufactured by the U.S. Mint in 1933, but never released to the general public, because President Franklin Delano Roosevelt had issued Executive Orders, later incorporated by Congress into statutes, taking the United States off the gold standard, and requiring all persons to redeem their gold coins for paper currency or non gold coin. The U.S. Mint was prohibited from releasing any gold. Nevertheless a number of illegally concealed 1933 Double Eagles gold pieces have surfaced in the course of the past 70 years.

 

The U.S. Secret Service has investigated this matter since the government first became aware of a 1933 Double Eagle being put up for public auction in 1944, and the United States has recovered every such piece that it was able to locate. All of the recovered pieces were traced back through the Secret Service investigation to Israel Switt, a former Philadelphia jeweler, now deceased, who was arrested for unlawfully possessing gold coins in 1934. Switt was interviewed by the Secret Service about the 1933 Double Eagles multiple times before his death in 1990. He claimed that he had no more. However, in 2004, his descendants reported finding 10 of the contraband pieces in a safe deposit box that they had opened years before with items transferred from, but never probated through, Switt’s wife’s estate.

 

The United States, through this complaint, seeks to establish once and for all that these 1933 Double Eagles are and always have been the property of the United States.

 

 

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... and forever.

 

As Jim Sinclair always writes, the main influence on the USD price of gold is obviously the Dollar. Since all other currencies are children of the Dollar, gold prices in other currencies will reflect the Dollar price to varying degrees.

In the long term yes. But in the short/ medium term it is likely we will continue to see a divergence of sorts between the central and peripheral currencies. I think this reflects the uncertainty in the market and instability in currencies. Think along the lines of capital flow. In this phase of the game we see capital flowing outwards to the periphery economies/currencies thanks to a global reflation trade and a new US dollar carry trade. At some point, when this crisis morphs to the next stage, that capital flow looks likely to savagely reverse, as investors panic to the perceived safety of the reserve currency [the madness of crowds] which would see the dollar spike and commodity/ emerging currencies slump... we have already seen an episode of this last year.

 

I kind of agree that other currencies are the children of the dollar [bretton Woods system] and that they will weaken with the dollar. But the dollar in the end would still remain relatively stronger than peripheral currencies though itself devalued against gold/silver. I just do not see hyper-inflation likely though my opinions could change with the facts. Those facts would be contingent on certain political decisions and events, which are nigh impossible to predict before-hand on a theoretical basis.

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... though my opinions could change with the facts. Those facts would be contingent on certain political decisions and events, which are nigh impossible to predict before-hand on a theoretical basis.

Wise words. The major differences between the opinions people on here have might come from the anticipation of political decisions.

 

E.g. WiseBear thinks THEY won't let IT happen. While I think, they will screw up big time (as so often).

 

Halcyon for instance tries to look for proofs why hyperinflation could happen, or not. But the problem is, that you can't prove what politics will do. You can only guess.

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Wise words. The major differences between the opinions people on here have might come from the anticipation of political decisions.

 

E.g. WiseBear thinks THEY won't let IT happen. While I think, they will screw up big time (as so often).

 

Halcyon for instance tries to look for proofs why hyperinflation could happen, or not. But the problem is, that you can't prove what politics will do. You can only guess.

Indeed. Guess..... and then hedge. :)

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