It is very possible that upward pressures on precious metals will continue for the foreseeable future. However, it is unlikely to result from disaster scenarios, or even severe disorder in the global economy. It will follow from reasons that are much more mundane, and (slightly) more subject to analysis.
Barring a catastrophic war, ten years from now, the US economy will still be a huge, diverse, vibrant, creative, resilient economy, as it is today. In spite of our huge trade deficit, in spite of our potentially dangerous savings and spending habits, the US econony is exceptionally strong and diverse - we have exceptional intellectual capital, and an important presence in a long list of industries/services -- e.g. - software, computer design, telecommunications, aerospace, defence, construction, pharmaceuticals, health care, banking & insurance, entertainment, agriculture, higher education . . .
Upward pressure on gold is the result of issues such as the following:
(1) Imbalances in the global economy, in particular, the dependence of the global economy on US consumption. This is as much a problem for other countries as it is for the US; in fact, the ramifications of a sudden decline in US consumption would likely be more serious for the rest of the world than it would be for is; in any case, it is obvious that the current level of imbalance (US trade deficit) cannot persist indefinitely, but it is highly unclear how quickly and by what mechanism this will correct. This imbalance of trade is putting pressure on gold in two ways (a) countries like Japan and China that are earning large surpluses of dollars are putting a portion of these surpluses into gold, and (b) by creating unease in the global financial markets, it increases interest in gold more broadly.
(2) Gradual move away from a dollar standard. If global economic development continues, the US dollar will ultimately be replaced as a reserve currency. This adjustment may be awkward, and is likely to increase global interest in gold, as a possible "bridge" between the current dollar standard and whatever standard arises in the future. (probably not a true gold standard)
(3) Inflationary pressures. Although the risk of hyper-inflation is virtually nill, there are factors that might be described as "primary" and "secondary" that are likely to increase inflationary pressures. Primary factors include direct pressure on resources stemming from global growth in demand that outstrips supply, arising, for example, from economic growth in Asia. Secondary factors are more structural/political in nature, and are more speculative to predict -- for example, one could make an argument that the downward pressure on prices that has resulted over the last decade from global outsourcing is coming to and end -- in part, because it will no longer be politically acceptable in the US. Somewhat longer term, as others have pointed out, dealing with debt problems, pension problems and the like will create political pressure to inflate.
As to actual predictions for 2006, I am happy to embarass myself with a few specifics:
(1) Gold will be strong through March, 2006, easily breaking the $ 600 mark; it will then pull back and trade in a fairly stable region $ 550 - 575 for the balance of the year. (caveat -- there is absolutely no hard core analysis behind these numbers! I picked March out of the hat as a high point because it is the end of the fiscal year for many Asian companies)
(2) There will not be a catastrophic housing bust in the US; the coastal markets will be substantial pullbacks, and these will cause some discomfort, but they will not have a major impact on financial markets.
To not have a major housing bust interest rates have to stop going up. With over a $1 TRILLION ARM's due for adjustment in 2007, that could be the back breaker if interest rates are much higher than they are today. A large derivatives bust could break the back of the system at any time. So far the LTCM, Enron, and Refco deals have been "tiny" busts. It's a risk that did not exist 25 years ago when gold last set records.
"How much gold or silver will it take to maintain a family of 6 if all H E L L breaks out!!! "
Not a bad question...how much gold, in oz., would it take today (call it $500) to make your nut for a month? Reasoning is that commodities, fuel, manufacturing, etc, will rise with the dollar in a harmonious way. But, if all hell breaks loose, your nut is probably going to change somewhat.
Topstuff <<Our entire economy for the past 12 year has been housing (and the ability to borrow against the house to make purchases>> Thank heaven most people do not understand the economic stupidity of buying an item w/ a 5 year life expectancy but paying for it for 30 years, otherwise this economy would really be in trouble.
I found this to be very interesting. This year the dollar has confounded the experts who felt a decline would continue. Instead the dollar has risen 10% to 15% against the Euro, Yen and other currencies. BUT look at the gold chart in Euros and Yen below.....The gold market has gone up even more in their currencies than in dollar terms...
So lets assume everything remains constant but that the dollar declines this coming year versus the Euro and Yen. If gold remains constant in Euro and Yen terms, then we should STILL see a rise in the price of gold in DOLLARS.....
If gold REALLY has a further surge AND the dollar declines, what do you think we will see in gold pricing? $1000 is seeming easy to achieve if that happens.....
<< <i>(1) Gold will be strong through March, 2006, easily breaking the $ 600 mark; it will then pull back and trade in a fairly stable region $ 550 - 575 for the balance of the year. (caveat -- there is absolutely no hard core analysis behind these numbers! I picked March out of the hat as a high point because it is the end of the fiscal year for many Asian companies)
(2) There will not be a catastrophic housing bust in the US; the coastal markets will be substantial pullbacks, and these will cause some discomfort, but they will not have a major impact on financial markets. >>
Gold at $725 by June-July '06
Silver at $9.40 by the same time.
By the end of next year, it could begin to get really crazy.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
to shed some light to all the gold buffs here. we are in december, the month of december is not the time to buy, if you want to buy metals you should wait. its just a way to show ice on the cake. the dow and nasdaq will both reflect all the shorts in the market. derived from all of the broker houses useing your money to hold down our profit. there is so much damm gold in the world. becuase no one sells . jewlery and gold is held world wide. 500 bucks for a oz? that is insane! expect gold to break down between febuary and july... then in the next months you will see a chance to buy. all this to just make a 10 to 15 percent return for the end of 2006.
<< <i>to shed some light on the gold buffs here. we are in december, in the month of december if you want to buy metals you should wait. its just a way to show ice on the cake. the dow and nasdaq will both reflect all the short in the market. derived from all of the broker houses. there is so much damm gold in the world. no one will sell it because of jewlery its cost of gold. 500 bucks for a oz? that is insane! expect gold to break down between febuary and july. the in the next months you will see a chance to buy at the 460 dollar level. thats my oppinon thanks have a nice day. >>
Your opinion is in direct opposition to the calendric cycles which have held true for the last 20+ years.
Then latter part of January is typically an upward spike time for gold and to a lesser extent, silver.
Generally we see a drop around December 15, give or take a week or so.
I usually read far more than I post. IOW, I keep my mouth shut and learn from what others have to say.
Having read a few of your posts in your short time around here, I'd strongly suggest you do the same.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
then click 1999, 2000, 2001,2002,2003,2004,2005. the recent spike in gold from 2003 will correct. like i said its my oppinon not fact. looks rather flat to me? a buying opportunity in july!
then click 1999, 2000, 2001,2002,2003,2004,2005. the recent spike in gold from 2003 will correct. like i said its my oppinon not fact. looks rather flat to me? a buying opportunity in july! >>
The 5 year chart goes from $255 to todays spot which is at $526.30
That's anything but flat. The rise has it's dips and spikes. I'm more than certain everyone on this thread is quite familiar with the PM charts.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Yes Deadhorse, the gold chart from 2001 to 2005 is anything but flat. It's a straight line with a constant upward slope which has doubled from 265 to 530. And when faired together it is DEAD STRAIGHT UPWARDS at a constant pace. If anything screamed bullish I don't what else would. I would suggest a parabola upwards will be the next shape we see.
Too much gold in the world? I never heard anything so far fetched. Even the economists and monetarists agree that there is too much paper to possibly back it all by gold. Our own paper outnumbers our gold stock by about 100 to 1. That's about $13 TRILLION in paper and $135 BILLION in gold. That's not a lot of gold. I'm sure you are all comforted to know that our govt has debt obligations of from $45-$75 TRILLION over the next 50 years, but we have 0.2% gold backing for that debt.
The US owns 8000 tons of gold, and other than the Germans few other countries other than G7 or G15's have over a thousand tons each. Of course no one has audited our gold for 50 years so who knows how much of it is leased or sold. The CB's decided years ago not to report leases or sales of gold. As long as it was kept in your vaults, it was not considered "sold." Would this pass GAAP? (lol)
Yes, there is so much gold awash that the Central Banks are not selling any more and that Russia, China, Venezuela and others are trying to increase their stash. The world's gold occupies a cube about the size of a tennis court. When the US first had a gold standard it was 1-1. Then it was diluted to 40%. And by the early 1970's it was diluted to 20-1. Then finally, abolishment of the gold standard after we sold 50% of our gold reserves to Europeans who wanted real money, not FRN's.
The 1% gold backing is actually right in line with the amount of assets the banks currently carry - about 1% of their assets. How many other businesses run on 1% of real assets/cash? Not many.
Gold is scarce and precious. And there is currently a war to control who has it and how much it's worth. This is the same economic war being waged for control of the world's currency. And we are losing our grip as the world's reserve currency. Gold has been perceived to be "worthless" by the masses for the past 25 years due to forced CB sales to depress prices, and make money via the carry trade. That brief sojourn in history is now gone.
very intresting. gold is nothing it just pretty to look at.. stick it in the oven and cook it. how many uses does gold have? i can name 1 jewlery i can name 2 stash it away and wait. i can name 3 um um no i cant!
Gold is scarce and precious. And there is currently a war to control who has it and how much it's worth. This is the same economic war being waged for control of the world's currency. And we are losing our grip as the world's reserve currency. Gold has been perceived to be "worthless" by the masses for the past 25 years due to forced CB sales to depress prices, and make money via the carry trade. That brief sojourn in history is now gone.
while gold may prove to be a good investment, it will not be a good investment because of a supply shortage caused by industrial consumption. Even if you were to classify jewelry usage as industrial consumption, there is enough above ground gold to theoretically balance that consumption for 50 years, even if gold mining were to cease completely. If gold goes up dramatically in price, it will be for reasons unrelated to a gold shortage.
this is very intresing point you made at least im not beating you with a stick to analize it.. but you may be right..
I recall a great list on the attributes of gold but could not find the article via a search. Basically: gold has been money for 5000 years, it is divisible, permanent, does not corrode, it's beautiful, highly conductive, portable, easily recognized as having value by most, cannot be artificially produced, hard to get at (in the ground), it is sufficiently rare, used in coinage, used by banks, sought by nations, wars have been fought over it, etc. An interesting read if someone else can link such an article.
Some very interesting predictions for 2006, thanks to everyone.
Perhaps someone has a “REAL” definition of hyper-inflation, but in my mind this does not mean the blow off at the end where bread costs $100 per loaf. Hyper-inflation to me is consistent inflation of around ten percent for several years.
I don’t know about some of you, but some of my 2006 predictions are starting to take shape a little to quickly.
Take a look at what the main stream media is saying about this one;
“Americans will begin to see globalization as a disaster, and begin to call for tariffs, and a return to isolationism.”
I did not copy the whole articule as it was pretty long, but here is the guts:
"The World Is Tilted
By Clyde Prestowitz Newsweek Issues 2006 - For most of the last 50 years, globalization has been a win-win proposition, making America richer while lifting hundreds of millions in the developing world out of poverty and despair. Recently, however, it has begun to operate differently, undermining U.S. welfare while creating imbalances likely to end in a global economic crisis.
globalization is tilting the world like a giant sliding board game on which the "flattening" of old barriers is accelerating the transfer of the supply side of the U.S. economy to the rest of the world, especially Asia. Take Boeing as an example. Long America's leading exporter, it symbolizes the kind of high-tech leadership on which the future of the U.S. economy is widely said to depend.
After losing market share to the European Airbus in recent years, Boeing responded by developing the new 787 Dreamliner, which is gathering record orders. Yet these sales may not add a lot to the U.S. economy because much of the work-including production of the critical carbon-fiber wings that Boeing always insisted would be kept at home-will be done in Japan.
Even more telling is the example of the semiconductor king, Intel. When economists and political leaders say American industry should concentrate on producing very-high-technology products where it has a clear comparative advantage, Intel's chips are what they have in mind. Yet company executives recently told a presidential advisory panel that under present circumstances they must consider building more of their new factories abroad. Over the next 10 years, they explained, the cost of running a semiconductor factory in the United States could be $1 billion more than that of running it abroad.
most business, academic, media and political leaders continue to insist that globalization is proceeding smoothly, making the world rich, more democratic and more peaceful. President Bill Clinton called globalization America's strategy, and President George W. Bush describes the American economy as the "envy of the world."
Nevertheless, a closer look reveals a dark side. The U.S. trade deficit is now more than $800 billion, or 7 percent of GDP, and grows inexorably. In short, U.S. exports are declining versus imports across the board, while its growth depends on foreign lenders (primarily in Japan and China) to finance the excess consumption.
Asian economies are characterized by relatively low consumption, savings rates of 30 to 50 percent of GDP, government intervention in markets, managed exchange rates, promotion of investment in "strategic" industries, incentives for exports and accumulation of chronic trade surpluses along with large reserves of dollars.
This structure has grown for so long because it has great benefits for both sides. America gets to live above its means, as cheap imports and foreign capital keep inflation and interest rates down and home values rising. The rest of the world, especially Asia, gets to climb the ladder of technology faster than it would otherwise. By accumulating dollars, Asia also gains strategic leverage over the lone superpower-which, by outsourcing management of the dollar, has ceded a degree of control over its own long-term interest rates.
here is a downside, by keeping the dollar chronically overvalued and providing investment subsidies to attract strategic industries out of the United States, the Asian export-led-growth approach has long tended to shrink U.S. productive capacity.
This, combined with the asymmetric global economic structure, is why the U.S. trade balance is collapsing even in advanced-technology products and services. The growing trade imbalance, in turn, makes the current mode of globalization unsustainable. To finance the deficit, the United States is already absorbing about 80 percent of available world savings. The value of U.S. imports is now more than double that of exports. To merely stabilize the deficit at its current rate would require that exports grow more than twice as fast as imports.
Of course, U.S. consumption and imports could be cut, but if that were to occur without a commensurate increase in consumption elsewhere, the whole world economy would suffer recession, if not depression.
The game cannot continue with one participant playing consumer while nearly all the others play producer. For the long-term success of all, everyone must agree to play the same globalization game.
The media is generally reporting that Wall Street expects the Fed to boost the Federal Funds Rate from 4% to 4.25% to 4.5% after the December and first 2006 meetings.
I think the fed would be afraid to raise rates beyond that - fearing too much of an economic slowdown... However, on the other hand, the Fed may need to go even higher with the rates to encourage foreign investment... But then again, I think the dollar must depreciate significantly in the long term due to this resulting massive debt... Obviously, this is not a simple thing (for me) to figure out!
Please share your thoughts on this.
For people who invest in CD's, it makes a big difference when trying to decide "when to go long" with a 3-5 year CD investment.
I agree, IMO, America has gone above and beyond the call of duty with respects to the "game". A few years back we were sold on NAFTA. Now we are feeling the wrench of reality. It is true we are a consuming nation, we have opened the doors to the world, and IMO, we are being stepped on. We are buying everything from TV's, cars, washing machines, clothes, etc... These are American products made outside the states. I also feel that the same is happening, or will happen with CAFTA. By the same token, I do not know what kind of deals are/were being made in the deal; I know I won't see the benefits. I do understand why the major players are moving business over seas, if I were a business, I would want to keep costs down and profits up. As well stated in the article, we demand too much in this country, more money, more holidays, etc... "Over there", they are happy to work, to bring in a paycheck, to feed his/her family for a fraction of the costs. From the perspective of the company, "think of the money we will save" ! I, personally, do not care for this; however, I do not blame them either. We as a nation are not well liked by other nations in general. I do not know how we can make this game fair play for us. Something does have to be done in order for America to get a fair share in these trade agreements. We need to bring the boys (major corps) back home. I could on in some detail, however, I think this is a discussion for another time/topic.
<< <i>BUT look at the gold chart in Euros and Yen below.....The gold market has gone up even more in their currencies than in dollar terms... >>
Bing-a-ling-a BINGO!
The ULTIMATE flight to safety has always been gold.
When gold rises in ALL currencies, it is showing recognition of WHY the founding fathers....AND...the central banks.....beginning with the Rothschilds, have always gravitated to GOLD as the real store of wealth.
Other investment vehicles simply provide the capital (from brief periods of "fads") to purchase and STORE more gold. A lesson hard learned by the Bank of England's sales that dropped the gold down ....TO...the juicy 252 level and provided us with a rare opportunity to "one up" ourselves while others diddled around.
There's more to come. Just will take some recognition of history and some ...logical...searches for conclusions.
<< <i>There will not be a catastrophic housing bust in the US; the coastal markets will be substantial pullbacks, and these will cause some discomfort, but they will not have a major impact on financial markets. >>
Higashiyama, you're dead right. There will be a DISASTROUS ....but brief.... crash, followed by oodles and oodles of foreign ...dollars....rushing to buy US real estate........and then rent it back to us while we enjoy the "froots" of NAFTA and GATT and MFN for China.
The elected (forbidden word)'s that foisted this on us should be hanged. But I doubt they will leave the "average" American enough resources to buy rope and they will certainly continue their efforts to remove firearms from private ownership.
Week in, week out, this has been the most informative and thoughtful thread we've had on the Forum, IMO. Thanks to all of you for your well thought-out and well-expressed perspectives.
Anyone ever read up on the Rothschilds? Jeez! AMAZING! Startin out as a COIN DEALER. Knockin on King Friedrich's door an sayin "Sire, I have one you NEED" and sellin him a coin for his collection.
Then later looking at some of his "loans" sheeesh. Forgotten now, but one was to some Scandinavian king who needed sumpin like 400 ounces of silver to keep the kingdom running.
Just an amazing story. Now I gotta go read it again.
In figuring how much gold is "worth" I was looking at The Numismatist of a month or so ago. Don't have the mag anymore, but they had an article on the Dahlonega or Charlotte mint. The feds bought the mint building for something like $8000. Gold was 20 bucks (wasn't it?) so that would make 400 ounces enough to buy a....MINT....building.
Now let's take another look at gold's potential.....
<< <i>The elected (forbidden word)'s that foisted this on us should be hanged. But I doubt they will leave the "average" American enough resources to buy rope and they will certainly continue their efforts to remove firearms from private ownership. >>
Topstuf, I haven't noticed much of that since 2000 and historically, it's only one of the political parties that wants to disarm the public.
Something to remember come 2008.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
I would suggest a parabola upwards will be the next shape we see.
I certainly hope not. While a parabolic move would probably put gold in the $750-800 range in the next year, it would also signal the END of the gold run. If that would be the case gold would collapse and then doom and gloomers would have nothing to look forward to.
I think the fed would be afraid to raise rates beyond that - fearing too much of an economic slowdown... However, on the other hand, the Fed may need to go even higher with the rates to encourage foreign investment... But then again, I think the dollar must depreciate significantly in the long term due to this resulting massive debt... Obviously, this is not a simple thing (for me) to figure out!
Foreigners have been investing in this country when rates were 1%, 2%, 3%, 4%, ect. The FED does not need to increase rates to encourage investment. Instead it needs to instill a level of confidence by which foreigners feel comfortable and secure in their invetsments. Namely they need to control spending.
It is very possible that upward pressures on precious metals will continue for the foreseeable future. However, it is unlikely to result from disaster scenarios, or even severe disorder in the global economy. It will follow from reasons that are much more mundane, and (slightly) more subject to analysis.
Barring a catastrophic war, ten years from now, the US economy will still be a huge, diverse, vibrant, creative, resilient economy, as it is today. In spite of our huge trade deficit, in spite of our potentially dangerous savings and spending habits, the US econony is exceptionally strong and diverse - we have exceptional intellectual capital, and an important presence in a long list of industries/services -- e.g. - software, computer design, telecommunications, aerospace, defence, construction, pharmaceuticals, health care, banking & insurance, entertainment, agriculture, higher education . . .
Upward pressure on gold is the result of issues such as the following:
(1) Imbalances in the global economy, in particular, the dependence of the global economy on US consumption. This is as much a problem for other countries as it is for the US; in fact, the ramifications of a sudden decline in US consumption would likely be more serious for the rest of the world than it would be for is; in any case, it is obvious that the current level of imbalance (US trade deficit) cannot persist indefinitely, but it is highly unclear how quickly and by what mechanism this will correct. This imbalance of trade is putting pressure on gold in two ways (a) countries like Japan and China that are earning large surpluses of dollars are putting a portion of these surpluses into gold, and (b) by creating unease in the global financial markets, it increases interest in gold more broadly.
(2) Gradual move away from a dollar standard. If global economic development continues, the US dollar will ultimately be replaced as a reserve currency. This adjustment may be awkward, and is likely to increase global interest in gold, as a possible "bridge" between the current dollar standard and whatever standard arises in the future. (probably not a true gold standard)
(3) Inflationary pressures. Although the risk of hyper-inflation is virtually nill, there are factors that might be described as "primary" and "secondary" that are likely to increase inflationary pressures. Primary factors include direct pressure on resources stemming from global growth in demand that outstrips supply, arising, for example, from economic growth in Asia. Secondary factors are more structural/political in nature, and are more speculative to predict -- for example, one could make an argument that the downward pressure on prices that has resulted over the last decade from global outsourcing is coming to and end -- in part, because it will no longer be politically acceptable in the US. Somewhat longer term, as others have pointed out, dealing with debt problems, pension problems and the like will create political pressure to inflate.
As to actual predictions for 2006, I am happy to embarass myself with a few specifics:
(1) Gold will be strong through March, 2006, easily breaking the $ 600 mark; it will then pull back and trade in a fairly stable region $ 550 - 575 for the balance of the year. (caveat -- there is absolutely no hard core analysis behind these numbers! I picked March out of the hat as a high point because it is the end of the fiscal year for many Asian companies)
(2) There will not be a catastrophic housing bust in the US; the coastal markets will be substantial pullbacks, and these will cause some discomfort, but they will not have a major impact on financial markets. >>
The above needs to be reposted as I think it is one of the most intellectually balanced and reasoned posts in this entire thread.
I'm all in favor of that prediction. And if it comes true, rare coins will rock for serveral years while the money supply and credit are further pumped. Rock on Benhelowan Bernanke.
We are currently in a sloped line upwards. But when this is done and starts to move, we could see that parabola. And somewhere in that mix there could be a bone-crushing correction to wipe out all the newbies and non-believers.
<< <i>We are currently in a sloped line upwards. But when this is done and starts to move, we could see that parabola. And somewhere in that mix there could be a bone-crushing correction to wipe out all the newbies and non-believers.
roadrunner >>
I sure hope so, with ALL precious metals. The sooner the better from my perspective.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Deadhorse, are you asking for the bone cruncher correction of the upwards parabola? I'll take the slow and steady as it is great fuel for the coin market. Then again, I sold a bunch of gold the past 2 months and wouldn't mind a 10-20% correction either in generics to buy back in again.
<< <i>Deadhorse, are you asking for the bone cruncher correction of the upwards parabola? I'll take the slow and steady as it is great fuel for the coin market. Then again, I sold a bunch of gold the past 2 months and wouldn't mind a 10-20% correction either in generics to buy back in again.
roadrunner >>
Yep, I sure am. There are a few newbies who seem to think there's no such thing as a correction. I know what it's like to drop 15-20 K in a day, even though it's on paper, it's a sobering experience. I think some of those just now jumping on the bandwagon need to to see how it can go both ways.
I also took some profit on 3000 ounces of .999 silver bars earlier this month with plans to replace it in late December or early Jan. I've done it before, I have no reason to believe that I won't be able to do it again. When the yearly cycles fail to materialize, then I suppose we are solidly into this bull run and then all bets are off.
For now, I'd like to see gold drop to $430 or less and silver back to $6.75. I know we'll get it back later in the year and then some. but we've gone a bit too long here recently without a substantial correctional drop. We are overdue. Better to see it now than 6 months from now, and have it be even larger.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
DeadHorse, at what price will you unload all of your gold and silver? I realize this is a difficult question for many reasons, and you'll take into account the market conditions at that time, but what are your predictions as far as how high these metals will go in the next 2-10 years?
.....GOD
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
<< <i>DeadHorse, at what price will you unload all of your gold and silver? I realize this is a difficult question for many reasons, and you'll take into account the market conditions at that time, but what are your predictions as far as how high these metals will go in the next 2-10 years?
>>
I don't have an answer for that. I used to have a point where I would no longer buy, but just watch and wait. Now I've moved those buy points up.
2 to 10 years? Wow, that's too far ahead to say. How about within 3+ years? I think we may see silver spike to $35, perhaps even more. I'm being conservative here. Gold? I could see gold at over $2000 an ounce as well, perhaps sometime in 2007.
Whatever happens, I suspect it will peak and the smoke will have cleared within 5 years. Sometime in that time frame, I'll probably sell out. I guess I have a figure somewhere that says if I sell out everything, then I can retire early. When we reach that number, I'm gone. What that number is, I don't know yet. The overall economy will be a primary factor there. I'll keep studying yearly charts and try to draw some sort of conclusion. That seems to be getting harder to do lately.
Just looking at this morning's continued rise tells me we are seriously overdue for a correction, not only that, but this is the time of the year that it traditionally occurs. The next 10 days could be quite telling.
I'd pay a lot for a crystal ball right about now.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Saints already made such a move at $475. But they could jump another $50 just like that as they are due.
I sold 1/3 of my saint position 2 months ago when gold first hit $480. It did not correct...yet. There will be time, and we could already be there now, when it will make more sense to just sit and hold tight. One does not want to miss the final move (like in 1979/80 from $520 to $875 in 2 weeks) by bailing out at $575. Since we are approx 3X to 4X where gold ought to be priced today......we have a ways to go to the top. First gold needs to take out $875 then $1000.
Silver has so much potential leverage I'm happy to just buy on the dips and sit on it.
<< <i>Siler manipulation. Here comes the crash!!!!!!! Down 25 cents
The speculators drove it up and are now dumping. Someone will be left holding the bag bigtime.
Of course the long term play is upward but this is why I bought bullion instead of futures. >>
I dont think so. Remember silver really went from $7.50 to 9+ without any pause. The metal broke out of a nice pattern at $8 that projects a target of $11. A normal correction could pull it back to $8.50. The stocks are really a much better play than the metal.
Oh, I expect it to continue it upward move (after a pullback) but if I held futures contracts right now the phone would be ringing and I would be scrambling (or is that called crying).
Also, Might just be a short squeeze before a big purchase
Yes, gold should be priced at 3X to 4X the current number to account for money supply increases since 1980. The correction has not occurred due to the over-management of gold, the gold carry trade, and a stock game that was more profitable at the time.
<< <i>Silver manipulation. Here comes the crash!!!!!!! Down 25 cents
The speculators drove it up and are now dumping. Someone will be left holding the bag bigtime.
Of course the long term play is upward but this is why I bought bullion instead of futures. >>
Down 51 cents over a 6 hour period today. I would expect a continued fall of another 50 to 75 cents in the next couple of days. Gold should follow suit, but not to the same degree.
Very interesting.
"Lenin is certainly right. There is no subtler or more severe means of overturning the existing basis of society(destroy capitalism) than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose." John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Thanks for the response, Deadhorse. As you've probably noticed (years ago), I agree with your assessment of the market trends. When gold topped $400/oz back in Jan. 96, I thought it was going to break out, but was about 10 years too early I still think gold has a looooooooooong way to go up.
.....GOD
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
Whatever happens, I suspect it will peak and the smoke will have cleared within 5 years. Sometime in that time frame, I'll probably sell out. I guess I have a figure somewhere that says if I sell out everything, then I can retire early. When we reach that number, I'm gone. What that number is, I don't know yet. The overall economy will be a primary factor there. I'll keep studying yearly charts and try to draw some sort of conclusion. That seems to be getting harder to do lately.
Interesting. Hit a certain price and "sell out everything, then I can retire early"
question: sell everything [meaning all your precious metals] and then store your wealth in what form, to use during "retirement"?
Comments
China shows its TRUE colors.
They've let the peasants taste capitalism.
They've legalized gold buying.
Could be a connection. People aren't DUMB.
US must condemn action. China sez "shaddap." We dither. They threaten Taiwan. We rattle sabers.
They say no more T-bills.
We either say "uncle" or ignore atrocity.
Ignore at peril.
It is very possible that upward pressures on precious metals will continue for the foreseeable future. However, it is unlikely to result from disaster scenarios, or even severe disorder in the global economy. It will follow from reasons that are much more mundane, and (slightly) more subject to analysis.
Barring a catastrophic war, ten years from now, the US economy will still be a huge, diverse, vibrant, creative, resilient economy, as it is today. In spite of our huge trade deficit, in spite of our potentially dangerous savings and spending habits, the US econony is exceptionally strong and diverse - we have exceptional intellectual capital, and an important presence in a long list of industries/services -- e.g. - software, computer design, telecommunications, aerospace, defence, construction, pharmaceuticals, health care, banking & insurance, entertainment, agriculture, higher education . . .
Upward pressure on gold is the result of issues such as the following:
(1) Imbalances in the global economy, in particular, the dependence of the global economy on US consumption. This is as much a problem for other countries as it is for the US; in fact, the ramifications of a sudden decline in US consumption would likely be more serious for the rest of the world than it would be for is; in any case, it is obvious that the current level of imbalance (US trade deficit) cannot persist indefinitely, but it is highly unclear how quickly and by what mechanism this will correct. This imbalance of trade is putting pressure on gold in two ways (a) countries like Japan and China that are earning large surpluses of dollars are putting a portion of these surpluses into gold, and (b) by creating unease in the global financial markets, it increases interest in gold more broadly.
(2) Gradual move away from a dollar standard. If global economic development continues, the US dollar will ultimately be replaced as a reserve currency. This adjustment may be awkward, and is likely to increase global interest in gold, as a possible "bridge" between the current dollar standard and whatever standard arises in the future. (probably not a true gold standard)
(3) Inflationary pressures. Although the risk of hyper-inflation is virtually nill, there are factors that might be described as "primary" and "secondary" that are likely to increase inflationary pressures. Primary factors include direct pressure on resources stemming from global growth in demand that outstrips supply, arising, for example, from economic growth in Asia. Secondary factors are more structural/political in nature, and are more speculative to predict -- for example, one could make an argument that the downward pressure on prices that has resulted over the last decade from global outsourcing is coming to and end -- in part, because it will no longer be politically acceptable in the US. Somewhat longer term, as others have pointed out, dealing with debt problems, pension problems and the like will create political pressure to inflate.
As to actual predictions for 2006, I am happy to embarass myself with a few specifics:
(1) Gold will be strong through March, 2006, easily breaking the $ 600 mark; it will then pull back and trade in a fairly stable region $ 550 - 575 for the balance of the year. (caveat -- there is absolutely no hard core analysis behind these numbers! I picked March out of the hat as a high point because it is the end of the fiscal year for many Asian companies)
(2) There will not be a catastrophic housing bust in the US; the coastal markets will be substantial pullbacks, and these will cause some discomfort, but they will not have a major impact on financial markets.
roadrunner
Not a bad question...how much gold, in oz., would it take today (call it $500) to make your nut for a month? Reasoning is that commodities, fuel, manufacturing, etc, will rise with the dollar in a harmonious way. But, if all hell breaks loose, your nut is probably going to change somewhat.
Topstuff
<<Our entire economy for the past 12 year has been housing (and the ability to borrow against the house to make purchases>>
Thank heaven most people do not understand the economic stupidity of buying an item w/ a 5 year life expectancy but paying for it for 30 years, otherwise this economy would really be in trouble.
_____________________________
Ellesmere on gold in 1993
_____________________________
Q: You know why you never see flowers around a house in Russia? A: You can't eat flowers, they use every available sq meter for vegetables.
Gold charts in Euros and Yen
So lets assume everything remains constant but that the dollar declines this coming year versus the Euro and Yen. If gold remains constant in Euro and Yen terms, then we should STILL see a rise in the price of gold in DOLLARS.....
If gold REALLY has a further surge AND the dollar declines, what do you think we will see in gold pricing? $1000 is seeming easy to achieve if that happens.....
$20 Saint Gaudens Registry Set
<< <i>(1) Gold will be strong through March, 2006, easily breaking the $ 600 mark; it will then pull back and trade in a fairly stable region $ 550 - 575 for the balance of the year. (caveat -- there is absolutely no hard core analysis behind these numbers! I picked March out of the hat as a high point because it is the end of the fiscal year for many Asian companies)
(2) There will not be a catastrophic housing bust in the US; the coastal markets will be substantial pullbacks, and these will cause some discomfort, but they will not have a major impact on financial markets. >>
Gold at $725 by June-July '06
Silver at $9.40 by the same time.
By the end of next year, it could begin to get really crazy.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
we are in december, the month of december is not the time to buy, if you want to buy metals you should wait. its just a way to show ice on the cake.
the dow and nasdaq will both reflect all the shorts in the market.
derived from all of the broker houses useing your money to hold down our profit.
there is so much damm gold in the world. becuase no one sells . jewlery and gold is held world wide. 500 bucks for a oz? that is insane!
expect gold to break down between febuary and july...
then in the next months you will see a chance to buy. all this to just make a 10 to 15 percent return for the end of 2006.
gold to $460 in july of 2006 or less.
thats my oppinon thanks have a nice day. looks rather flat after december to me ?
<< <i>to shed some light on the gold buffs here.
we are in december, in the month of december if you want to buy metals you should wait. its just a way to show ice on the cake.
the dow and nasdaq will both reflect all the short in the market.
derived from all of the broker houses.
there is so much damm gold in the world. no one will sell it because of jewlery its cost of gold. 500 bucks for a oz? that is insane!
expect gold to break down between febuary and july.
the in the next months you will see a chance to buy at the 460 dollar level. thats my oppinon thanks have a nice day. >>
Your opinion is in direct opposition to the calendric cycles which have held true for the last 20+ years.
Then latter part of January is typically an upward spike time for gold and to a lesser extent, silver.
Generally we see a drop around December 15, give or take a week or so.
I usually read far more than I post. IOW, I keep my mouth shut and learn from what others have to say.
Having read a few of your posts in your short time around here, I'd strongly suggest you do the same.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
then click 1999, 2000, 2001,2002,2003,2004,2005.
the recent spike in gold from 2003 will correct. like i said its my oppinon not fact.
looks rather flat to me? a buying opportunity in july!
<< <i>go to gold yearly charts
then click 1999, 2000, 2001,2002,2003,2004,2005.
the recent spike in gold from 2003 will correct. like i said its my oppinon not fact.
looks rather flat to me? a buying opportunity in july! >>
The 5 year chart goes from $255 to todays spot which is at $526.30
That's anything but flat. The rise has it's dips and spikes. I'm more than certain everyone on this thread is quite familiar with the PM charts.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Too much gold in the world? I never heard anything so far fetched. Even the economists and monetarists agree that there is too much paper to possibly back it all by gold. Our own paper outnumbers our gold stock by about 100 to 1. That's about $13 TRILLION in paper and $135 BILLION in gold. That's not a lot of gold. I'm sure you are all comforted to know that our govt has debt obligations of from $45-$75 TRILLION over the next 50 years, but we have 0.2% gold backing for that debt.
The US owns 8000 tons of gold, and other than the Germans few other countries other than G7 or G15's have over a thousand tons each. Of course no one has audited our gold for 50 years so who knows how much of it is leased or sold. The CB's decided years ago not to report leases or sales of gold. As long as it was kept in your vaults, it was not considered "sold." Would this pass GAAP? (lol)
Yes, there is so much gold awash that the Central Banks are not selling any more and that Russia, China, Venezuela and others are trying to increase their stash. The world's gold occupies a cube about the size of a tennis court. When the US first had a gold standard it was 1-1. Then it was diluted to 40%. And by the early 1970's it was diluted to 20-1. Then finally, abolishment of the gold standard after we sold 50% of our gold reserves to Europeans who wanted real money, not FRN's.
The 1% gold backing is actually right in line with the amount of assets the banks currently carry - about 1% of their assets. How many other businesses run on 1% of real assets/cash? Not many.
Gold is scarce and precious. And there is currently a war to control who has it and how much it's worth. This is the same economic war being waged for control of the world's currency. And we are losing our grip as the world's reserve currency. Gold has been perceived to be "worthless" by the masses for the past 25 years due to forced CB sales to depress prices, and make money via the carry trade. That brief sojourn in history is now gone.
roadrunner
gold is nothing it just pretty to look at..
stick it in the oven and cook it.
how many uses does gold have?
i can name 1 jewlery
i can name 2 stash it away and wait.
i can name 3 um um no i cant!
Gold is scarce and precious. And there is currently a war to control who has it and how much it's worth. This is the same economic war being waged for control of the world's currency. And we are losing our grip as the world's reserve currency. Gold has been perceived to be "worthless" by the masses for the past 25 years due to forced CB sales to depress prices, and make money via the carry trade. That brief sojourn in history is now gone.
while gold may prove to be a good investment, it will not be a good investment because of a supply shortage caused by industrial consumption. Even if you were to classify jewelry usage as industrial consumption, there is enough above ground gold to theoretically balance that consumption for 50 years, even if gold mining were to cease completely. If gold goes up dramatically in price, it will be for reasons unrelated to a gold shortage.
this is very intresing point you made at least im not beating you with a stick to analize it..
but you may be right..
I recall a great list on the attributes of gold but could not find the article via a search. Basically: gold has been money for 5000 years, it is divisible, permanent, does not corrode, it's beautiful, highly conductive, portable, easily recognized as having value by most, cannot be artificially produced, hard to get at (in the ground), it is sufficiently rare, used in coinage, used by banks, sought by nations,
wars have been fought over it, etc. An interesting read if someone else can link such an article.
Here are 2 others I found in the process.
25 reasons why gold will rise in value - Jim Willie
15 reasons to own gold - Gary North
roadrunner
Perhaps someone has a “REAL” definition of hyper-inflation, but in my mind this does not mean the blow off at the end where bread costs $100 per loaf. Hyper-inflation to me is consistent inflation of around ten percent for several years.
I don’t know about some of you, but some of my 2006 predictions are starting to take shape a little to quickly.
Take a look at what the main stream media is saying about this one;
“Americans will begin to see globalization as a disaster, and begin to call for tariffs, and a return to isolationism.”
I did not copy the whole articule as it was pretty long, but here is the guts:
"The World Is Tilted
By Clyde Prestowitz
Newsweek
Issues 2006 - For most of the last 50 years, globalization has been a
win-win proposition, making America richer while lifting hundreds of
millions in the developing world out of poverty and despair. Recently,
however, it has begun to operate differently, undermining U.S. welfare while
creating imbalances likely to end in a global economic crisis.
globalization is tilting the world like a giant sliding
board game on which the "flattening" of old barriers is accelerating the
transfer of the supply side of the U.S. economy to the rest of the world,
especially Asia. Take Boeing as an example. Long America's leading exporter,
it symbolizes the kind of high-tech leadership on which the future of the
U.S. economy is widely said to depend.
After losing market share to the European Airbus in recent years, Boeing responded
by developing the new 787 Dreamliner, which is gathering record orders. Yet
these sales may not add a lot to the U.S. economy because much of the
work-including production of the critical carbon-fiber wings that Boeing
always insisted would be kept at home-will be done in Japan.
Even more telling is the example of the semiconductor king, Intel. When
economists and political leaders say American industry should concentrate on
producing very-high-technology products where it has a clear comparative
advantage, Intel's chips are what they have in mind. Yet company executives
recently told a presidential advisory panel that under present circumstances
they must consider building more of their new factories abroad. Over the
next 10 years, they explained, the cost of running a semiconductor factory
in the United States could be $1 billion more than that of running it
abroad.
most business, academic, media and political leaders continue to insist that
globalization is proceeding smoothly, making the world rich, more democratic
and more peaceful. President Bill Clinton called globalization America's
strategy, and President George W. Bush describes the American economy as the
"envy of the world."
Nevertheless, a closer look reveals a dark side. The U.S. trade deficit is
now more than $800 billion, or 7 percent of GDP, and grows inexorably.
In short, U.S. exports are declining
versus imports across the board, while its growth depends on foreign lenders
(primarily in Japan and China) to finance the excess consumption.
Asian economies are characterized by relatively low consumption, savings rates of 30 to 50 percent of GDP, government intervention in markets, managed exchange rates,
promotion of investment in "strategic" industries, incentives for exports
and accumulation of chronic trade surpluses along with large reserves of
dollars.
This structure has grown for so long because it has great benefits for both
sides. America gets to live above its means, as cheap imports and foreign
capital keep inflation and interest rates down and home values rising. The
rest of the world, especially Asia, gets to climb the ladder of technology
faster than it would otherwise. By accumulating dollars, Asia also gains
strategic leverage over the lone superpower-which, by outsourcing management
of the dollar, has ceded a degree of control over its own long-term interest
rates.
here is a downside, by keeping the dollar chronically overvalued
and providing investment subsidies to attract strategic industries out of
the United States, the Asian export-led-growth approach has long tended to
shrink U.S. productive capacity.
This, combined with the asymmetric global economic structure, is why the
U.S. trade balance is collapsing even in advanced-technology products and
services. The growing trade imbalance, in turn, makes the current mode of
globalization unsustainable. To finance the deficit, the United States is
already absorbing about 80 percent of available world savings. The value of
U.S. imports is now more than double that of exports. To merely stabilize
the deficit at its current rate would require that exports grow more than
twice as fast as imports.
Of course, U.S. consumption and imports could be cut, but if that were to occur without a commensurate increase in consumption elsewhere, the whole world economy
would suffer recession, if not depression.
The game cannot continue with one participant playing consumer
while nearly all the others play producer. For the long-term success of all,
everyone must agree to play the same globalization game.
© 2005 Newsweek, Inc."
I think the fed would be afraid to raise rates beyond that - fearing too much of an economic slowdown... However, on the other hand, the Fed may need to go even higher with the rates to encourage foreign investment... But then again, I think the dollar must depreciate significantly in the long term due to this resulting massive debt... Obviously, this is not a simple thing (for me) to figure out!
Please share your thoughts on this.
For people who invest in CD's, it makes a big difference when trying to decide "when to go long" with a 3-5 year CD investment.
In a rising market, you lock your mortgage rate not your CD rate.
I do understand why the major players are moving business over seas, if I were a business, I would want to keep costs down and profits up. As well stated in the article, we demand too much in this country, more money, more holidays, etc... "Over there", they are happy to work, to bring in a paycheck, to feed his/her family for a fraction of the costs. From the perspective of the company, "think of the money we will save" ! I, personally, do not care for this; however, I do not blame them either.
We as a nation are not well liked by other nations in general. I do not know how we can make this game fair play for us. Something does have to be done in order for America to get a fair share in these trade agreements. We need to bring the boys (major corps) back home. I could on in some detail, however, I think this is a discussion for another time/topic.
Tom
<< <i>BUT look at the gold chart in Euros and Yen below.....The gold market has gone up even more in their currencies than in dollar terms... >>
Bing-a-ling-a BINGO!
The ULTIMATE flight to safety has always been gold.
When gold rises in ALL currencies, it is showing recognition of WHY the founding fathers....AND...the central banks.....beginning with the Rothschilds, have always gravitated to GOLD as the real store of wealth.
Other investment vehicles simply provide the capital (from brief periods of "fads") to purchase and STORE more gold. A lesson hard learned by the Bank of England's sales that dropped the gold down ....TO...the juicy 252 level and provided us with a rare opportunity to "one up" ourselves while others diddled around.
There's more to come. Just will take some recognition of history and some ...logical...searches for conclusions.
<< <i>There will not be a catastrophic housing bust in the US; the coastal markets will be substantial pullbacks, and these will cause some discomfort, but they will not have a major impact on financial markets. >>
Higashiyama, you're dead right. There will be a DISASTROUS ....but brief.... crash, followed by oodles and oodles of foreign ...dollars....rushing to buy US real estate........and then rent it back to us while we enjoy the "froots" of NAFTA and GATT and MFN for China.
The elected (forbidden word)'s that foisted this on us should be hanged. But I doubt they will leave the "average" American enough resources to buy rope and they will certainly continue their efforts to remove firearms from private ownership.
And.........THEY BETTER!
Sorry to say the game IS over.
Got gold?
Here's a warning parable for coin collectors...
Then later looking at some of his "loans" sheeesh. Forgotten now, but one was to some Scandinavian king who needed sumpin like 400 ounces of silver to keep the kingdom running.
Just an amazing story. Now I gotta go read it again.
Now let's take another look at gold's potential.....
yummy yummy yummy
<< <i>The elected (forbidden word)'s that foisted this on us should be hanged. But I doubt they will leave the "average" American enough resources to buy rope and they will certainly continue their efforts to remove firearms from private ownership. >>
Topstuf, I haven't noticed much of that since 2000 and historically, it's only one of the political parties that wants to disarm the public.
Something to remember come 2008.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
I certainly hope not. While a parabolic move would probably put gold in the $750-800 range in the next year, it would also signal the
END of the gold run. If that would be the case gold would collapse and then doom and gloomers would have nothing to look forward to.
Knowledge is the enemy of fear
Foreigners have been investing in this country when rates were 1%, 2%, 3%, 4%, ect. The FED does not need to increase rates to encourage investment. Instead it needs to instill a level of confidence by which foreigners feel comfortable and secure in their invetsments. Namely they need to control spending.
Knowledge is the enemy of fear
<< <i>Some comments and predictions for 2006.
It is very possible that upward pressures on precious metals will continue for the foreseeable future. However, it is unlikely to result from disaster scenarios, or even severe disorder in the global economy. It will follow from reasons that are much more mundane, and (slightly) more subject to analysis.
Barring a catastrophic war, ten years from now, the US economy will still be a huge, diverse, vibrant, creative, resilient economy, as it is today. In spite of our huge trade deficit, in spite of our potentially dangerous savings and spending habits, the US econony is exceptionally strong and diverse - we have exceptional intellectual capital, and an important presence in a long list of industries/services -- e.g. - software, computer design, telecommunications, aerospace, defence, construction, pharmaceuticals, health care, banking & insurance, entertainment, agriculture, higher education . . .
Upward pressure on gold is the result of issues such as the following:
(1) Imbalances in the global economy, in particular, the dependence of the global economy on US consumption. This is as much a problem for other countries as it is for the US; in fact, the ramifications of a sudden decline in US consumption would likely be more serious for the rest of the world than it would be for is; in any case, it is obvious that the current level of imbalance (US trade deficit) cannot persist indefinitely, but it is highly unclear how quickly and by what mechanism this will correct. This imbalance of trade is putting pressure on gold in two ways (a) countries like Japan and China that are earning large surpluses of dollars are putting a portion of these surpluses into gold, and (b) by creating unease in the global financial markets, it increases interest in gold more broadly.
(2) Gradual move away from a dollar standard. If global economic development continues, the US dollar will ultimately be replaced as a reserve currency. This adjustment may be awkward, and is likely to increase global interest in gold, as a possible "bridge" between the current dollar standard and whatever standard arises in the future. (probably not a true gold standard)
(3) Inflationary pressures. Although the risk of hyper-inflation is virtually nill, there are factors that might be described as "primary" and "secondary" that are likely to increase inflationary pressures. Primary factors include direct pressure on resources stemming from global growth in demand that outstrips supply, arising, for example, from economic growth in Asia. Secondary factors are more structural/political in nature, and are more speculative to predict -- for example, one could make an argument that the downward pressure on prices that has resulted over the last decade from global outsourcing is coming to and end -- in part, because it will no longer be politically acceptable in the US. Somewhat longer term, as others have pointed out, dealing with debt problems, pension problems and the like will create political pressure to inflate.
As to actual predictions for 2006, I am happy to embarass myself with a few specifics:
(1) Gold will be strong through March, 2006, easily breaking the $ 600 mark; it will then pull back and trade in a fairly stable region $ 550 - 575 for the balance of the year. (caveat -- there is absolutely no hard core analysis behind these numbers! I picked March out of the hat as a high point because it is the end of the fiscal year for many Asian companies)
(2) There will not be a catastrophic housing bust in the US; the coastal markets will be substantial pullbacks, and these will cause some discomfort, but they will not have a major impact on financial markets. >>
The above needs to be reposted as I think it is one of the most intellectually balanced and reasoned posts in this entire thread.
Knowledge is the enemy of fear
roadrunner
<< <i>I would suggest a parabola upwards will be the next shape we see. >>
Hopefully not for a bit. I still have a bit more buying to do
roadrunner
<< <i>We are currently in a sloped line upwards. But when this is done and starts to move, we could see that parabola. And somewhere in that mix there could be a bone-crushing correction to wipe out all the newbies and non-believers.
roadrunner >>
I sure hope so, with ALL precious metals. The sooner the better from my perspective.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
roadrunner
<< <i>Deadhorse, are you asking for the bone cruncher correction of the upwards parabola? I'll take the slow and steady as it is great fuel for the coin market. Then again, I sold a bunch of gold the past 2 months and wouldn't mind a 10-20% correction either in generics to buy back in again.
roadrunner >>
Yep, I sure am. There are a few newbies who seem to think there's no such thing as a correction. I know what it's like to drop 15-20 K in a day, even though it's on paper, it's a sobering experience. I think some of those just now jumping on the bandwagon need to to see how it can go both ways.
I also took some profit on 3000 ounces of .999 silver bars earlier this month with plans to replace it in late December or early Jan. I've done it before, I have no reason to believe that I won't be able to do it again. When the yearly cycles fail to materialize, then I suppose we are solidly into this bull run and then all bets are off.
For now, I'd like to see gold drop to $430 or less and silver back to $6.75. I know we'll get it back later in the year and then some. but we've gone a bit too long here recently without a substantial correctional drop. We are overdue. Better to see it now than 6 months from now, and have it be even larger.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
<< <i>DeadHorse, at what price will you unload all of your gold and silver? I realize this is a difficult question for many reasons, and you'll take into account the market conditions at that time, but what are your predictions as far as how high these metals will go in the next 2-10 years?
I don't have an answer for that. I used to have a point where I would no longer buy, but just watch and wait. Now I've moved those buy points up.
2 to 10 years? Wow, that's too far ahead to say. How about within 3+ years? I think we may see silver spike to $35, perhaps even more. I'm being conservative here. Gold? I could see gold at over $2000 an ounce as well, perhaps sometime in 2007.
Whatever happens, I suspect it will peak and the smoke will have cleared within 5 years. Sometime in that time frame, I'll probably sell out. I guess I have a figure somewhere that says if I sell out everything, then I can retire early. When we reach that number, I'm gone. What that number is, I don't know yet. The overall economy will be a primary factor there. I'll keep studying yearly charts and try to draw some sort of conclusion. That seems to be getting harder to do lately.
Just looking at this morning's continued rise tells me we are seriously overdue for a correction, not only that, but this is the time of the year that it traditionally occurs. The next 10 days could be quite telling.
I'd pay a lot for a crystal ball right about now.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Coiled spring. Gold/Silver. I believe St.Gaudens are about to do the same upward move.
I sold 1/3 of my saint position 2 months ago when gold first hit $480. It did not correct...yet. There will be
time, and we could already be there now, when it will make more sense to just sit and hold tight. One does
not want to miss the final move (like in 1979/80 from $520 to $875 in 2 weeks) by bailing out at $575.
Since we are approx 3X to 4X where gold ought to be priced today......we have a ways to go to the top.
First gold needs to take out $875 then $1000.
Silver has so much potential leverage I'm happy to just buy on the dips and sit on it.
roadrunner
The speculators drove it up and are now dumping. Someone will be left holding the bag bigtime.
Of course the long term play is upward but this is why I bought bullion instead of futures.
<< <i>Siler manipulation. Here comes the crash!!!!!!! Down 25 cents
The speculators drove it up and are now dumping. Someone will be left holding the bag bigtime.
Of course the long term play is upward but this is why I bought bullion instead of futures. >>
I dont think so. Remember silver really went from $7.50 to 9+ without any pause. The metal broke out of a nice pattern at $8 that projects a target of $11. A normal correction could pull it back to $8.50. The stocks are really a much better play than the metal.
Knowledge is the enemy of fear
Also, Might just be a short squeeze before a big purchase
<< <i>Since we are approx 3X to 4X where gold ought to be priced today...... >>
Huh? You're saying gold SHOULD be at 135 -180 ???
Random Collector
www.marksmedals.com
Yes, gold should be priced at 3X to 4X the current number to account for money supply increases since 1980. The
correction has not occurred due to the over-management of gold, the gold carry trade, and a stock game that was
more profitable at the time.
roadrunner
Except for govt pensions of course.
<< <i>Silver manipulation. Here comes the crash!!!!!!! Down 25 cents
The speculators drove it up and are now dumping. Someone will be left holding the bag bigtime.
Of course the long term play is upward but this is why I bought bullion instead of futures. >>
Down 51 cents over a 6 hour period today. I would expect a continued fall of another 50 to 75 cents in the next couple of days. Gold should follow suit, but not to the same degree.
Very interesting.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
"Ask, and it shall be given you; seek, and ye shall find; knock, and it shall be opened unto you." -Luke 11:9
"Hear, O Israel: The LORD our God is one LORD: And thou shalt love the LORD thy God with all thine heart, and with all thy soul, and with all thy might." -Deut. 6:4-5
"For the LORD is our judge, the LORD is our lawgiver, the LORD is our king; He will save us." -Isaiah 33:22
You'd be spanked before breakfast.
Interesting. Hit a certain price and "sell out everything, then I can retire early"
question: sell everything [meaning all your precious metals] and then store your wealth in what form, to use during "retirement"?
Greenbacks?
Liberty: Parent of Science & Industry