Gold, December 2009...
OneCent
Posts: 3,561 ✭
Whelp, since gold dropped below $900 today and seemingly has no will power to sustain $1K levels, just where is it going?
Sideways, down and out, or poised for the big run to $2000. I recall Sinclair proseltyzing that gold would be at the $2,000 mark in '09.
Personally, I don't think that there is a even a remote chance of this happening, but then again I don't know sh&t from shineola...
Where will gold be in December 2009?
Sideways, down and out, or poised for the big run to $2000. I recall Sinclair proseltyzing that gold would be at the $2,000 mark in '09.
Personally, I don't think that there is a even a remote chance of this happening, but then again I don't know sh&t from shineola...
Where will gold be in December 2009?
Collector of Early 20th Century U.S. Coinage.
ANA Member R-3147111
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No idea on December, but my guess is we are above where we are now.
We could set an all time high for gold in the first half of 2009 and still be lower by December. If I had to make a call I'd say we'd be over $1000 in December. I've already stated that in 2009 we would exceed the all time high.
As far as gold having no "will power," it is in a different class than the other PM's and industrial metals. While Plat, Pall, Copper, and Aluminum are moving up strongly, gold and silver are left to correct. It's no secret that there are large derivative positions on both metals, and that's just not the case for the others. So besides regular market supply and demand, gold and silver have to deal with frequent Fed and CB interventions. Since they have said that they intervene to control the price of gold (to support currencies) it's no secret. I've never heard them say that they intervene in platinum or palladium markets. Considering that Asian buying is way down right now, gold is being mainly supported by investors, miners, banks, and speculators. One thing different this spring than in past springs is that if investors continue to add to GLD and other gold ETF's, the lack of seasonal jewelry won't be missed. There has been little buying of gold for jewelry in the past 2 months but it has been replaced by investors/specs. Let's also not forget that total mining output is way down as well, lower than it has been in over 5 years. Many projects that were in the works are now either shelved or in mothballs.
roadrunner
Like you said these are industrial metals that collapsed beyond all collapsedom last year. The dead cat has bounced. Now gravity will regain its influence.
The price of gold is difficult to predict as its value is mostly based on emotion and psychology. By historical measures and conditions gold should do well. However we must always be aware of the law of unintended consequences which has a nasty habit of proving at the most inopportune times.
Knowledge is the enemy of fear
Regarding the gold price question, one point that is often overlooked is that the loose money of the past year is not inflationary in an environment where credit is deflating and the velocity of money is crashing. To date, it would be hard to argue that Fed policy has been too loose. The challenge of course comes when the economy starts showing life (and it will, at some point). At that point, the Fed will need to reverse course, at risk of choking off a recovery. At first glance, it would seem that the politics will favor ongoing easy money and inflation, but this may not sit well with the growing number of retirees, who have political clout.
It seems that the gold price is already reflecting the high degree of overall market uncertainty, so, barring an unforeseeable catastrophe, the driver of the price should be inflationary expectations. Increasing inflation would likely be coupled with some degree of economic good news, which would actually put a damper on the increase driven by inflation. So, it is hard for me to see a major move out of the previously mentioned 800 - 1000 range during this calendar year.
Dow historical trends
Interesting article on Dow returns since 1929 if the original Dow 30 were left intact. I found it to be the opposite of what I would have expected. Using some estimating the original Dow 30 outperformed the massaged Dow 30 by a large margin. The down side was that inflation adjusted to govt stats, the Dow's price gains (w/o dividends) was 1.4% per year over 80 years. Without inflation that rate comes up to 4.6% and improves dramatically with dividends.
Gold has increased approx 50X since 1929 and that's approx +5% per year, essentially the same as the non-dividend Dow rate. It would appear that the vast majority of the price index gains on the Dow (as well as gold) are purely inflationary. Take out taxes and commissions, and there's not a whole lot left.
roadrunner
I think industrial metals were priced to perfection in 2008. The highs in copper, alum, nickel, zinc, ect will probably stand for a long time. They had overcorrected to the downside and are probing for equilibrium. Perhaps a little more upside, then a little downside, then a long sideways trading range marked by the 2008 lows and the highs that will be reached in this rally. So to agree with you I think they are trying to make a bottom. But bottom doesnt mean they will go up. 10 years from now their charts will probably look like those of the Nikkei from 1990 to 2000 and the Nasdaq from 2000 to present.
It would appear that the vast majority of the price index gains on the Dow (as well as gold) are purely inflationary
Agree 1000%. Thats why I have always said NO asset class is a great long-term investment. All will have their day in the sun in which they produce above average returns--usually brought about by a demographic shift--but over time all will have relatively similiar returns. This return will be somewhere around the rate of inflation.
Knowledge is the enemy of fear
There is nearly always one Hot stock group or commodity. At one time it was pharma & biotech. Then tech stocks. Then base metals, REITs, etc., etc. It's hard to find the "hot" investment now. Everything seems down or stagnant. Where can one go now to turn a profit? About all I can do is hope my job holds up, keep working, and put any extra FRNs in PMs as hopefully a safe haven.
Regards,
John
1947-P & D; 1948-D; 1949-P & S; 1950-D & S; and 1952-S.
Any help locating any of these OBW rolls would be gratefully appreciated!
The rate drop from 1989-1994 (10% to 3%) seems to veer from the above trends as it was not followed by a significant increase in the gold price (only +30% in 1993 followed by a slow decline into the lows of 1999). Rates were back to 6% by the end of 1994 but a large increase in the money supply (+10%/yr) had commenced, recharging the stock and housing markets for years to come. I believe this was also the beginning of much more active gold managment as defined by Clinton's financial team of Rubin, Summers, and others.
It's no secret that the FED did nothing to hold back metals in the 1970's (even CB gold sales didn't have much of an effect) but have done considerable metals' management in the 1990's and 2000's. Still, metals have typically followed the Feds fund rate curve.
The price of gold is a forward looking inflation (easing) monitor. We had no significant inflation in 2001-2003 yet the pog starting moving away. I think it's more than coincidence that it has been one of the first things to spring back following the commodity/SM collapses of 2008.
roadrunner