10 compelling reasons why gold is going to do well this year
ProofCollection
Posts: 6,055 ✭✭✭✭✭
Saw this on the Internet... it is compelling:
Found this on the Internet...
Not that you people need any convincing, but....
Here are 10 compelling reasons why gold is going to do well this year.
* The Stimulus Effect
* COMEX Traders Predict $1,600 Gold… by December
* “Big Money” Inflows
* China’s Doubling Down!
* Demand Building across the Board
* The Paper Dollar’s 30% Drop
* Gold/Dow Ratio Signals $8,000 Gold
* U.S. Treasury Dept. Signals $5,468 Gold
* Riding the “Commodity Super Cycle”
* Historic Model Predicts $6,214 Gold
This artilcle was also interesting, and adds to the "China's Doubling Down" item above:
Gold fever grips Chinese investors
Found this on the Internet...
Not that you people need any convincing, but....
Here are 10 compelling reasons why gold is going to do well this year.
* The Stimulus Effect
* COMEX Traders Predict $1,600 Gold… by December
* “Big Money” Inflows
* China’s Doubling Down!
* Demand Building across the Board
* The Paper Dollar’s 30% Drop
* Gold/Dow Ratio Signals $8,000 Gold
* U.S. Treasury Dept. Signals $5,468 Gold
* Riding the “Commodity Super Cycle”
* Historic Model Predicts $6,214 Gold
This artilcle was also interesting, and adds to the "China's Doubling Down" item above:
Gold fever grips Chinese investors
0
Comments
Forum AdministratorPSA & PSA/DNA ForumModerator@collectors.com | p 800.325.1121 | PSAcard.com
There are additional compelling reasons for gold to move up but we've discussed them before at length. Gold keeps on adding to its days in the $900's. It's within a few days of exceeding the 100 or so days that it recorded in 2008. Time is just as bullish as price...often more so.
Why isn't it above $1000 already? Simple! To keep every potential caboose rider like MoneyLA off the train for as long as possible. When it finally blows out of the station, it will leave a lot of people in the dust thinking they could have hopped on at $1000-$1050. If they blink, they'll miss the chance. And those same people who wouldn't touch gold at $700-$990 are all of a sudden going to pony up $1050-$1200 to get on board? I don't think so.
roadrunner
<< <i>I'd be grateful if it managed to stay above 900 >>
AMEN! By all accounts it should be below.
Look at Silver's % Drop for comparison.
gold will not be above 1000 that actually have a credible basis in
fact. Not fantasy land, for the most part, like those 10 reasons above.
how about i start?
1. India's doubling of import duty on gold and silver is likely to encourage recycling of the metals locally in what could continue to keep imports subdued for the rest of this year, traders and analysts said on Monday. Gold imports by India continue to plunge, thanks to high prices and the volatility in the bullion market these days.
2. jewelry sales in the dumps, down quarter after quarter.
3. the dollar has just a good chance to go up as it has to go down.
4. price of oil could drop again and stay down for some time to come.
5. inflation could be a ways away. hoping for this year is doubtful.
etc.. etc...
feel free to add some more if you can actually think of reasons why
gold might not go up by taking off your blinders.
2. jewelry sales in the dumps, down quarter after quarter.
3. the dollar has just a good chance to go up as it has to go down.
4. price of oil could drop again and stay down for some time to come.
5. inflation could be a ways away. hoping for this year is doubtful.
etc.. etc...
feel free to add some more if you can actually think of reasons why
gold might not go up by taking off your blinders.
Let's address some of the above "blinding" issues:
1. India was essentially absent (ie almost ZERO) in gold buying in the first quarter, yet gold prices increased dramatically into later February, and then again in April to May. This is even more striking when one considers that 500 tons of scrap gold flooded the market in the first quarter, and GLD holdings went steadily up regardless. What happens if India starts buying again or central banks become net buyers rather than sellers lead by the BRICs? What happens when the sell your scrap gold mania runs out and it's back to the regular sources to find gold? Note that miner production has been in a downtrend since 2001. South Africa, still the heavyweight for gold production has seen a -10% yoy reduction.
India's gold jewelry/investment culture is largely underground because of the large tax bite that the govt wants to take. Adding a double import tax won't change the underground market in India where much of their wealth is kept hidden from govt in gold.
2. "Jewelry in the dumps"......go ahead and read #1 again. I don't think that piddly US jewelry sales are a driving force in the world market. Much of the US gold sold in jewelry stores is marked up 2X to 10X the actual weight of gold in the item. I'd rather see former jewelry buyers get a fairer shake buying gold at a coin shop. If the Indians not buying in the first qtr didn't put a dent in gold, what chance does lack of US buying?
3. The dollar has a far, far better chance of going DOWN over the next year and long term. This is purely a mathematical result of QE/monetizing the debt and future $1 TRILL budget deficits for years to come. Show me history of fiat currencies where long term trends showed the currency strengthening against massive printing/QE. The dollar may still have one more multi-month rally left in it....but it's long term trends are heavily biased to the downside, even during the currenty environment of declining business and economic conditions. The chances for hyper inflation are much stronger in just such an environment, not when business is booming.
4. Oil and gold are not linked together, though they often do move together at times. The dollar and gold are much more closely linked. And if the dollar gets weak, oil will go eventually up as well.
5. Gold's best performances are during strongly inflationary times and deflationary times. But most importantly, it moves up when confidence wanes in govt. 2 for 2 here for the time being.
Sinclair addresses some of these same topics on his website today:
Dress up manoeuvres for the US dollar are part of keeping the US bond market from breaking below the 28 year uptrend line, an event that would derail any hope for easy financing of the enormous bond offerings now in the Federal pipeline.
**You must see that publishing gold and dollar time and price targets tend more to set targets for the Goldman Sachs type trading programs that are key elements in the Management of Perspective central planners now fighting desperately to keep the US Treasury financing window wide open.**
You must recognize that the key element to success in the Battle Royal is the value of the US dollar. The key element in the gold price is the US dollar. The most intense challenge in the ability to make markets camouflage economic reality is gathering momentum in present time.
Unemployment is approaching 10% in the USA with no STOP expected at that level. All the financial programs so far have been structured to bail out the Fat Cats of Wall Street. No bailout of any significance has had a positive impact on employment. The GM restructuring is a brilliant example of paper shuffling and worker elimination. Truth be known, it was the financial arm of motors that thrust the first bankruptcy stone (ie GMAC's losing derivatives bets)
The cancer of the OTC derivative, having turned a normal and modest recession into a total disaster, has spread its deadly tentacles down into the real economy where bankruptcies of previously sound businesses unable to withstand the decline in demand are occurring. Worker reduction in the real economy now stimulates the unemployment figures hardly likely to stop at 10% in the USA.
These deadly tentacles are strangling states, counties and cities in the USA where many are on the brink today. California has already passed the point of no return with an uncertain future and an economy larger than some countries.
Despite statements to the contrary, the BRIC nations are clearly lowering their dependence on US Treasury instruments as national reserves. It is the momentum change in buying that impacts the US dollar and treasuries trend-wise. A close on the USDX below .82 was the first crack in the dyke of the strong dollar policy. The next challenge to the US dollar is the 112-113 28 year up trend line of the 30 year US treasury instrument. When broken down, the event will represent the two measures of the US dollar's worth in a major down leg of their respective long term bear markets.
I feel for those making this gigantic effort to mask reality as they have an impossible job. The size of the demand for money means the ever increasing creation of larger and larger offerings of US treasury instruments into a market that, outside of the knee-jerk risk aversion crowd, witnesses declining non-US Federal demand.
The Battle Royal is to keep Washington from looking exactly like California, with the exception that via Quantitative Easing the dollar will continue to be manufactured albeit losing value significantly through USA IOUs.
roadrunner
Over the past four decades, gold has been one-third more volatile than the Standard & Poor’s 500-stock index, and yet has delivered a lower return: an annualized 8.4%, versus 9.1% for the S&P index, says Steve Condon, director of investor advisory services at Truepoint Capital in Cincinnati.
Wow, I didn't realize that gold was that close to the performance of stocks over the past 40 years considering that it stunk from 1980-2002 and wasn't even allowed to be owned in the US prior to 1974......that's 27 years out of the 40 that work against the performance. One can only imagine how badly gold must have trounced the S&P from 1974-1980 and now 2003-2009. But that's not important since gold's performance is almost always measured by how its done over 40-50 years.
Owning bullion has its own challenges. You have to worry about storing, securing and insuring it. Under a standard homeowner’s policy from Allstate Corp., for example, gold kept in the house is covered only up to around $200 in value. Special riders are available: Allstate will ensure $20,000 worth of household gold for an annual premium of $684, with a $250 deductible, for example.
These guys must have never heard about joining the ANA or something similar and getting collector's insurance on your safe deposit box. $20,000 worth of gold kept in the SDB would cost far less than $684 annually through Hugh Wood, Barb Wingo, etc. Similarly you can try to insure your collector car through a regular auto policy and pay an arm and a leg w/o replacement coverage or do it through a Collector Auto Policy for $50-$150/yr.
Buying the stuff is not cheap. Markups on bullion are around 5%. Since the Internal Revenue Service considers gold a collectible, not an investment, it is ineligible for the 15% maximum federal capital gains tax—the rate for gold is 28%.
If Cash4gold can buy it for well under spot, you can too if you set up your own jewelry parties. If you work through any number of local coin dealers you can buy at the same price they sell to the smelter for and save a good part of that 5% markup. The higher IRS rate is true. But protection comes with a price. If you want paper gold to protect you then buy into GLD at <1% premium to spot.
Unlike stocks and bonds, gold pays no dividends or interest.
In the current environment, trying to find good companies making money whose stock price will go up over 6-12 months that pay decent (if any) dividends is a tough job. I'd be more worried about recovering the difference betw posted interest rates and the real rate of inflation....plus the return of >100% of my capital. There is still inflation in the economy regardless of what the CPI stats claim. There is also deflation in many areas, esp in assets. One can invest in a home right now and "save" money on income taxes, but losing 10-15% per year in property taxes, maintenance, and the home price falling sort of negates the IRS benefit. Homes, just like stocks, don't always return your money.
roadrunner
<< <i>1. India's doubling of import duty on gold and silver is likely to encourage recycling of the metals locally in what could continue to keep imports subdued for the rest of this year, traders and analysts said on Monday. Gold imports by India continue to plunge, thanks to high prices and the volatility in the bullion market these days.
2. jewelry sales in the dumps, down quarter after quarter.
3. the dollar has just a good chance to go up as it has to go down.
4. price of oil could drop again and stay down for some time to come.
5. inflation could be a ways away. hoping for this year is doubtful.
etc.. etc...
feel free to add some more if you can actually think of reasons why
gold might not go up by taking off your blinders.
Let's address some of the above "blinding" issues:
1. India was essentially absent (ie almost ZERO) in gold buying in the first quarter, yet gold prices increased dramatically into later February, and then again in April to May. This is even more striking when one considers that 500 tons of scrap gold flooded the market in the first quarter, and GLD holdings went steadily up regardless. What happens if India starts buying again or central banks become net buyers rather than sellers lead by the BRICs? What happens when the sell your scrap gold mania runs out and it's back to the regular sources to find gold? Note that miner production has been in a downtrend since 2001. South Africa, still the heavyweight for gold production has seen a -10% yoy reduction.
India's gold jewelry/investment culture is largely underground because of the large tax bite that the govt wants to take. Adding a double import tax won't change the underground market in India where much of their wealth is kept hidden from govt in gold.
2. "Jewelry in the dumps"......go ahead and read #1 again. I don't think that piddly US jewelry sales are a driving force in the world market. Much of the US gold sold in jewelry stores is marked up 2X to 10X the actual weight of gold in the item. I'd rather see former jewelry buyers get a fairer shake buying gold at a coin shop. If the Indians not buying in the first qtr didn't put a dent in gold, what chance does lack of US buying?
3. The dollar has a far, far better chance of going DOWN over the next year and long term. This is purely a mathematical result of QE/monetizing the debt and future $1 TRILL budget deficits for years to come. Show me history of fiat currencies where long term trends showed the currency strengthening against massive printing/QE. The dollar may still have one more multi-month rally left in it....but it's long term trends are heavily biased to the downside, even during the currenty environment of declining business and economic conditions. The chances for hyper inflation are much stronger in just such an environment, not when business is booming.
4. Oil and gold are not linked together, though they often do move together at times. The dollar and gold are much more closely linked. And if the dollar gets weak, oil will go eventually up as well.
5. Gold's best performances are during strongly inflationary times and deflationary times. But most importantly, it moves up when confidence wanes in govt. 2 for 2 here for the time being.
Sinclair addresses some of these same topics on his website today:
Dress up manoeuvres for the US dollar are part of keeping the US bond market from breaking below the 28 year uptrend line, an event that would derail any hope for easy financing of the enormous bond offerings now in the Federal pipeline.
**You must see that publishing gold and dollar time and price targets tend more to set targets for the Goldman Sachs type trading programs that are key elements in the Management of Perspective central planners now fighting desperately to keep the US Treasury financing window wide open.**
You must recognize that the key element to success in the Battle Royal is the value of the US dollar. The key element in the gold price is the US dollar. The most intense challenge in the ability to make markets camouflage economic reality is gathering momentum in present time.
Unemployment is approaching 10% in the USA with no STOP expected at that level. All the financial programs so far have been structured to bail out the Fat Cats of Wall Street. No bailout of any significance has had a positive impact on employment. The GM restructuring is a brilliant example of paper shuffling and worker elimination. Truth be known, it was the financial arm of motors that thrust the first bankruptcy stone (ie GMAC's losing derivatives bets)
The cancer of the OTC derivative, having turned a normal and modest recession into a total disaster, has spread its deadly tentacles down into the real economy where bankruptcies of previously sound businesses unable to withstand the decline in demand are occurring. Worker reduction in the real economy now stimulates the unemployment figures hardly likely to stop at 10% in the USA.
These deadly tentacles are strangling states, counties and cities in the USA where many are on the brink today. California has already passed the point of no return with an uncertain future and an economy larger than some countries.
Despite statements to the contrary, the BRIC nations are clearly lowering their dependence on US Treasury instruments as national reserves. It is the momentum change in buying that impacts the US dollar and treasuries trend-wise. A close on the USDX below .82 was the first crack in the dyke of the strong dollar policy. The next challenge to the US dollar is the 112-113 28 year up trend line of the 30 year US treasury instrument. When broken down, the event will represent the two measures of the US dollar's worth in a major down leg of their respective long term bear markets.
I feel for those making this gigantic effort to mask reality as they have an impossible job. The size of the demand for money means the ever increasing creation of larger and larger offerings of US treasury instruments into a market that, outside of the knee-jerk risk aversion crowd, witnesses declining non-US Federal demand.
The Battle Royal is to keep Washington from looking exactly like California, with the exception that via Quantitative Easing the dollar will continue to be manufactured albeit losing value significantly through USA IOUs.
roadrunner >>
it is so painful to comment back and forth inline on this forum.. i just
do not have the energy to do so right now. forgive me.
1. investment/speculation buying was def holding up the market and
picking up the slack. i agree that india imports falling bigtime was soaked
up by other avenues but one cannot discount how much gold that country
imports. without them it is taking a considerable chunk of buyers out
of the game. gold is never destroyed in most cases.. it just keeps changing hands.. and gold scrap coming in will always be there. a lot
of these gold investment coins being banged out by the thousands
and thousands will eventually just be worth melt (scrap gold). When
jewelry demand picks up those coins will become jewelry and the
cycle will continue.
keeping wealth hidden is one thing.. an up and coming middle class
wanting gold is another. the gold has to come in somewhere and known
imports going down the tubes probably means underground imports
are also falling with it.
2. gold is a world wide commodity. why do you mention just US sales? i bet every country has slumping jewelry sales. one cannot
discount just how much gold they go through let alone industrial
applications slowing down too.
3. the dollar just has to maintain and it will ruin gold's chance to go up
a lot in the short/near term.
4. oil, to me, is a good commodity to keep an eye on. if one thinks
a compelling reason why gold will go up to be "Riding the “Commodity Super Cycle”".. oil has to be a part of it in my opinion.
5. if you think gold does well during strong bouts of inflation/deflation
what happens when thinks do not move just as fast as you would
like to see? what if things take years and years and years to develop? that cannot be bullish for gold where you have people wanting
to make the quick buck. if we get out of this "recession" and the stock
market companies start making a lot of money again.. people will
switch out of gold/silver/plat/etc... and go to where they see profits
albiet very late to the game, naturally. just as they were late to the
game for gold.
as always i enjoy your posts roadrunner.