"On 1st November 1923 1 pound of bread cost 3 billion, 1 pound of meat: 36 billion, 1 glass of beer: 4 billion."
Posted on 01/14/2010 6:02:04 PM PST by blam
Gold Super Spike To $5,000
Commodities / Gold and Silver 2010
Jan 14, 2010 - 06:37 PM
By: Money Morning
Peter Krauth writes: Let me get right to the point. Gold's going to $5,000 an ounce.
I know that sounds preposterous to most people. In fact, some of you probably think I'm crazy.
But for a whole host of reasons, $5,000 may well end up being a conservative estimate.
So before you start posting comments that I've gone bonkers, hear me out...
In 2001, gold traded as low as $255 an ounce. Within eight years, its price had quadrupled to more than $1,100 an ounce. How many investors thought that was possible, or even likely? Probably not very many.
Yet, it happened.
What's more, since hitting its secular bottom back in 2001, gold has posted a positive return in every calendar year. So far, the current bull market has been pretty orderly.
During the past 10 years, gold has indeed become the trade of the decade, beating out commodities, oil, high-grade U.S. corporate bonds, U.S. Treasuries, and yes, U.S. stocks.
A crisp $100 bill invested 10 years ago would today be worth more than $400 in gold, $357 in commodities (as measured by the S&P GSCI Enhanced Total Return Index), $268 in oil, $190 in corporate bonds or U.S. Treasuries, and only $90 in U.S. stocks.
That's right: We're talking about a $10 loss in U.S. stocks over 10 years. Ouch.
Meanwhile, gold has embarked upon a secular upward trend that is far from over. If the 1970's are any indication, gold's going much, much higher from here.
When U.S. President Richard M. Nixon opted to close the gold window in August 1971, the yellow metal had already risen from its fixed price of $35 an ounce to $42 an ounce. By the time gold peaked in 1980, it had risen to $850, rewarding early investors with a 2,400% return. My guess is that any such forecast in 1970 would probably have been met with the same kind of ridicule I expect that my current projection could attract.
Granted, there's no guarantee that we're about to duplicate the 1970s. (I could certainly do without the disco, bell bottoms and leisure suits). But a s Mark Twain once noted: "History does not repeat itself, but it often rhymes."
And that could mean even sweeter returns for gold investors this time around.
In fact, let's crunch a few numbers - just for fun.
Why $5,000 an Ounce Gold Isn't Out of Bounds
[snip]
ping
"On 1st November 1923 1 pound of bread cost 3 billion, 1 pound of meat: 36 billion, 1 glass of beer: 4 billion."
Dude needs to put down the crack pipe, seriously.
If it gets that high there will be blood in the streets and ammunition will be worth more than gold.
pump and dump?
Nah. It won’t go there in virtually one move like NASDAQ did in 1996-2000. I’ve written here many times that gold regularly drops 10% or more in just a couple of days, and I see that continuing.
That said, carnival barker to the stars Jim Cramer was hawking gold, the gold ETF, and gold miners last Friday and I wrote here on Monday that it was time to take a little off the table. I’m sticking to that — I myself see “them” shaking out Cramer’s mob by next Friday.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.
