Gold Bugs Ready for Revelry

The Street ^ | 28 December 2006 | Simon Constable

[shrinkermd]

Gold prices look set to rocket in 2007 with a sickly greenback and geopolitical tensions topping the list of driving factors, according to a broad cross-section of bullion market watchers polled by TheStreet.com.

The whole group, which includes miners, a portfolio manager and a coin dealer, sees the possibility of spot prices breaking through the 2006 high of around $725 an ounce, reached in May. Gold for immediate delivery sold for around $630 in late December, having risen from $520 in January.

What will be interesting to see is how well the group fares when compared with those surveyed for the annual London Bullion Market Association forecast, expected in mid-January.

Last year, most of those canvassed by the LBMA, a group dominated by bankers and consultants, woefully underestimated the extent of the rally, with an average forecast of $534.94. Instead, through Dec. 28, spot gold had a mean price of around $600 an ounce

[shrinkermd]

Remainder of article gives positions and recommendations of some stock market pundits.

[martin_fierro]

[RightWhale]

Gold, copper, and silver are tightly coiled springs fully compressed ready to spring to new heights overnight or to slink back down the stairs.

[Melinda]

"New heights" as in topping the late '70's? If only.

[wbill]

I always get worried when the analysts start cheering. Saw a program the other day where about a half dozen stock cheerleaders said "Everything was coming up roses, Dow to 14 or 15k, we're all going to get rich." Granted, I'm not going to sell everything and stuff it in my mattress, but I am going to get a little less agressive.

Goldbugs are right about once every 20 years. Gold went through the roof in the past 18-24 months, I'd guess that it will be awhile before they're right again. Not that I have any spectacular insight, or anything, though.

[Attention Surplus Disorder]

The biggest problem for gold (and I am a fan, not a fanatic) is: When do you sell it and get the crap you wanted out of, which got you into gold in the first place?

[RightWhale]

Or new lows. Or simply sit tightly coiled while futures contract after futures contract expires at zero value.

[proxy_user]

I am glad this guy knows what's going to happen in the future.

He must make a lot of money investing.

But why does he tell everyone else?

[wbill]

LOL! If today's Market Comentators were right all of the time, then they'd be called 'Retired, former Market Commentators" instead.

[LeGrande]

Lets everyone get our picks ready for the first of the year so we can then come back in 6 months or so and see who was the best investors : )

I predict the gold bugs are going to lose.

I just love how the doom and gloomers look back and then make prediction on the last year or so :)

[Former MSM Viewer]

I predict that stocks will continue to flucuate

[mlo]

Must be time to short gold.

[AmericaUnited]

I bet the FED manufactures more Gold, just to piss off the gold bugs. :)

[AmericaUnited]

P.S. If I had one paper fiat dollar, for every time the gold bugs said the dollar was going to collapse or world wide economic disaster was at hand, I'd be a multimillionaire, even adjusting for inflation.

[Toddsterpatriot]

Or simply sit tightly coiled while futures contract after futures contract expires at zero value.

Options contracts can expire at zero. Futures contracts usually wouldn't, unless the commodity went to zero.

[RightWhale]

Options contracts can expire at zero.

Well, I have no particular use for gold, so I wouldn't need a futures contract either. Don't options contracts usually expire at zero value unless they are part of the executive compensation package?

[Toddsterpatriot]

Don't options contracts usually expire at zero value unless they are part of the executive compensation package?

Exchange traded options expire worthless about 70% (IIRC) of the time. For instance, if you think IBM ($97.12) is going to rise, you buy an IBM January 100 call for $0.95.

If IBM closes below 100 on January 19, 2007, the option expires worthless.

If you think gold will rise, you might buy a gold futures contract (gold is about $630). When the contract expires, let's say at $625, your loss is the difference between what you paid for the contract and where gold closed.

[RightWhale]

expire worthless about 70% (IIRC) of the time

But the ones you own expire worthless about 97% of the time. That is a law.

[abb]

"If you'll excuse me, Mr. Bond, I have to tend to separating my gold from the late Mr. Solo."

[Toddsterpatriot]

But the ones you own expire worthless about 97% of the time. That is a law.

That's why I stopped trading them. LOL!

Also, the ones I want to buy are too expensive and the ones I want to sell short are too cheap.