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Gold Prices Hit $1,300
Gold Alert ^ | September 24th, 2010 | GoldAlert

Posted on 09/24/2010 1:34:51 PM PDT by An Old Man

GOLD PRICE NEWS - Gold futures traded up to $1,301.30 per ounce on the COMEX as the gold price continued to power higher amid weakness in the U.S. dollar. The gold price has surged 4.2% in September, bringing is year-to-date gain to 18.5%. Gold prices have rallied alongside the broader commodity complex, which is headed for its fifth straight weekly gain as measured by the Reuters/Jefferies CRB Index. Hard assets have been strong as the U.S. dollar decline has accelerated in recent weeks. The euro has risen in concert with the gold price, appreciating to 1.34 versus the dollar Friday morning, its highest level since April.

Gold mining producers and explorers have rallied on the back of the ascending gold price - with the Market Vectors Gold Miners ETF (GDX) gaining 4% this month. Earlier this week, institutional investors gathered at the annual Denver Gold Forum, where both industry executives and the investment community were in good spirits amid record gold prices. While the senior gold producers have posted impressive gains both this month and this year, the small-cap gold mining equities have seen spectacular returns. The Market Vectors Junior Gold Miners ETF (GDXJ) has bested its larger counterpart, the GDX, by roughly 300% this month, rising 11.9% in September alone.

A flurry of mergers and acquisitions has bolstered the smaller gold miners and explorers although given the large percentage moves in many of these companies, the pace of activity may slow in coming months. National Bank Financial analyst Tara Hassan, in a note to clients, commented that “While many juniors pointed to the increase in implied valuation as a result of recent transactions (Kinross (KGC) - Red Back Mining (RBI), Goldcorp (GG) - Andean (AND.TSX) ), the run-up in valuation of numerous junior gold companies during the quarter has resulted in many trading at premium valuations which may make acquisitions more challenging in the coming months.”

In a bull-bear debate over the direction of the gold price at the Denver Forum, Paul Walker of the metals consultancy firm GFMS, squared off against Dundee Wealth’s Martin Murenbeeld. While Walker called for weakness in the mid-term, Murenbeeld forecasted a continuation of strong gold prices in the back of investment demand.

What does a $1,300 gold price mean? According to Bill Fleckenstein, President of Fleckenstein Capital and a long-time bull on the gold price, “Gold at $1300 doesn’t mean a whole heck of a lot any more than $1200, $1100 or $1000 did.” Fleckenstein elaborated his thoughts to CNBC, stating that “There seems to me there is a tremendous amount of angst about gold having a correction, the implication being everyone is worried about those folks who already own gold. To me, the bigger trade is, almost no one owns gold. And, if you ask your friends, do they own gold and how much, I think the securer trade is that people have yet to understand that this colored paper is not worth anything and people need protection. There will be shakeouts as in the past, but the path of least resistance is up.”

How high will the gold price ultimately go? While nobody has a crystal ball, Fleckenstein postulates that “I don’t know whether a parabolic move will happen in the near-term. I think before it is over, sometime it will go parabolic.”


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Where to from here?
1 posted on 09/24/2010 1:34:51 PM PDT by An Old Man
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To: An Old Man

Nowhere to go but UP! (And then down...) LOL!

I made a tidy little sum today. :)


2 posted on 09/24/2010 1:36:46 PM PDT by Diana in Wisconsin (Save the Earth. It's the only planet with Chocolate.)
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To: An Old Man

How is the dollar doing? This is a sign of a weak dollar, or a bubble. Or both.


3 posted on 09/24/2010 1:36:46 PM PDT by meyer (Tax the productive to carry the freeloaders - What is it with democrats and slavery?)
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To: An Old Man

Adjusted for inflation Gold was at $2200 an ounce in 1980


4 posted on 09/24/2010 1:37:55 PM PDT by Mikey_1962 (Obama: The Affirmative Action President. He's shovel ready!)
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To: meyer

Inflation is usually the friend of gold. However, what we see going on here is not inflation but COMPETITIVE CURRENCY DEVALUATION. In other words, the central banks of the world are trying to out-do each other in intervening to weaken their currency.

This is especially true in export oriented countries.

The USD is weak because of lack of confidence in our debt and deficit.

Japan weakens the yen to prevent exports from sliding. The US eases. Brazil weakens the real. Japan weakens again. Around and around the print parade goes on, and the main beneficiary is gold, the anti-currency.

It’s a pretty logical argument, and it’s not obvious what will end this game.

So, what will cause gold to fall ?

The answer is probably be a return to robust, sustainable growth and modest inflation — pretty much the opposite of what we see now. But this doesn’t seem imminent (but if the GOP takes over Congress and are SERIOUS about stopping the Obama agenda, this might just happen. If they’re simply going to do surface house cleaning, gold will not fall ).

But is there any other outside event or headline that could whack gold? I can only think of one, and that would be a serious move by China to revalue the yuan.

If China did it by her own, that wouldn’t necessarily be the economic panacea many of us imagine it would be. It wouldn’t all of the sudden reverse the much-derided trade imbalances. But it might put a halt to the competitive devaluation daisy-chain, as Japan, Brazil, and the US might feel a bit less pressure to weaken their own currencies.

That would probably take a lot of the air out of gold, but that being said, it’s hard to imagine China making this move any time soon, and in a dramatic way.

Hence, in the meantime, gold will continue to rise ( and watch silver also ).

Gold and silver can only work together. There is 17 times as much silver in the Earth’s crust as there is gold. But with silver at about $20/oz, and gold averaging the past week at $1295/oz, that means gold is trading at a 65 times premium to silver. So, either gold is was overvalued compared to silver, or silver is way undervalued.


5 posted on 09/24/2010 1:41:04 PM PDT by WebFocus
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To: Diana in Wisconsin
I made a tidy little sum today.,p> I'm pleased to learn of your good fortune!
6 posted on 09/24/2010 1:41:47 PM PDT by An Old Man
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To: An Old Man


Dow up 3% in 5 years
Gold up 96% in 5 years

I so glad I stopped investing in 401k's and all that government trap nonsense. Never again will my money go into the market. There are far better investments. My money is up 600% since 2000.
7 posted on 09/24/2010 1:42:41 PM PDT by Scythian
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To: An Old Man

Thank you! It’s been a long 12 years, but things are finally starting to pay off. :)


8 posted on 09/24/2010 1:45:15 PM PDT by Diana in Wisconsin (Save the Earth. It's the only planet with Chocolate.)
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To: Mikey_1962
Yup, sure it did.

Look at where it is today (on an unadjusted basis)

9 posted on 09/24/2010 1:47:21 PM PDT by An Old Man
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To: Diana in Wisconsin

You made a tidy sum off of an $8 range in gold today? Sounds like a tall tale.


10 posted on 09/24/2010 1:49:28 PM PDT by FightThePower! (Fight the powers that be!)
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To: WebFocus
or silver is way undervalued"

or

Have you ever tried to carry $13,000 worth of $20 silver in your pants pocket?

Packing $13,000 in gold is a piece of cake.

11 posted on 09/24/2010 1:51:47 PM PDT by An Old Man
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To: An Old Man

13,000 worth of gold is merely 13 gold oz coins, that’s nothing ...


12 posted on 09/24/2010 1:55:04 PM PDT by Scythian
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To: Mikey_1962
“Adjusted for inflation Gold was at $2200 an ounce in 1980”

No! You are wrong, my friend. Gold is the same now as it was in 1980 or 1880 or 1780 or forever. It is the American dollar and other world currency that is no longer worth anything. Inflation caused by printing more and more paper currency that is not backed by anything but a lying government causes the price we pay for gold and other precious metals to go up.

13 posted on 09/24/2010 2:00:25 PM PDT by Tupelo
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To: Mikey_1962
Adjusted for inflation Gold was at $2200 an ounce in 1980

That was a brief spike followed immediately by 23 years at an average below $400. The spike was the anomaly. That spike accompanied the attempt by the Hunt brothers to corner the market on silver via futures contracts. It didn't work. Manipulative prices seldom hold.

That blip is NOT to be compared in any way to the run-up we are presently seeing. This time, it is about the debt bomb and the inevitable debasing of world currencies.

14 posted on 09/24/2010 2:04:45 PM PDT by Migraine (Diversity is great... ...until it happens to YOU.)
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To: Scythian
Perhaps I should have used the term "duck soup ".
15 posted on 09/24/2010 2:04:50 PM PDT by An Old Man
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To: An Old Man

well just dang . . . I almost bought back when it dropped a little back in the 800’s and thought nah . . . argh and I bought Dell instead of Apple . . . back when they were both in the 30’s . . . that is now why I stick to mutual funds. :(


16 posted on 09/24/2010 2:07:31 PM PDT by Qwackertoo (Let this nightmare of Nov. 4, 2008 be over ASAP.)
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To: FightThePower!
"You made a tidy sum off of an $8 range in gold today? Sounds like a tall tale."

LOL! I bought when it was around $250. I'm smiling today...

17 posted on 09/24/2010 4:16:13 PM PDT by redhead (Abortion: The number one killer of human beings. Period.)
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To: redhead

I’ll bet!


18 posted on 09/24/2010 4:24:21 PM PDT by FightThePower! (Fight the powers that be!)
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To: An Old Man; Jet Jaguar; NorwegianViking; ExTexasRedhead; HollyB; FromLori; ...

The list, ping

Let me know if you would like to be on or off the ping list

http://www.nachumlist.com/


19 posted on 09/25/2010 10:40:45 PM PDT by Nachum (The complete Obama list at www.nachumlist.com)
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To: FightThePower!

Those who know me know my story. :)


20 posted on 09/26/2010 5:31:35 AM PDT by Diana in Wisconsin (Save the Earth. It's the only planet with Chocolate.)
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