Posted on 09/15/2010 4:35:10 AM PDT by Jet Jaguar
Gold prices were likely to touch $1,300 an ounce before the end of this calendar year, said Philip Klapwijk, the chairman of GFMS, the London-based independent metals research consultancy. He was speaking at the launch of the year’s first update of Gold Survey 2010 in London on Monday.
Profit-booking pulled the yellow metal back to $1,250 an oz on Tusday after hitting an all-time high of $1,264 last week.
It’s hard to see how price gains can be sustainable when major processors of gold into jewellery like India and Turkey are net exporters of bullion, the position the sector was in early last year. However, in the calendar year till date, Indian offtake has jumped by around 170 tonnes compared to the same period last year, showing that investment has a firmer base to build on, says GFMS. Another factor GFMS sees as significant to the rally is the shift in the official sector to net purchasing in the first half, a development chiefly attributable to the collapse in selling by signatories to the Central Bank Gold Agreement.
The material contribution from central banks’ net buying of around 90 tonnes in the first half was useful. But arguably of more importance was the broader shift in sentiment — investors, for instance, could be more confident of solid price gains knowing central banks were, in a sense, on their side, said GFMS.
Klapwijk reiterated that rising investment demand would continue to prove that gold was a safe-haven investment during economic crisis. The ability of the gold price to manage record highs this year was to a large extent due to the firmer footing of falling scrap and recovering jewellery demand, he said.
“Investment demand was the prime driver of the rally during the first half of the year to record highs. The metal certainly lived up to its reputation as a safe haven in troubled times. Just look at the explosion in investor interest that followed the sovereign debt crisis unfurling in Europe. And, it came as little surprise that we saw this interest strongest in arenas with a clear physical link, such as the ETFs (exchange-traded funds), or in regions with memories of currency shock, such as the German-speaking Europe,” Klapwijk said.
Murky world outlook Other factors cited in explaining investor interest included a shaky outlook for the industrialised world’s economies, low interest rates and the still feared threat of inflation. One traditional driver of gold strength, US dollar weakness, proved conspicuously contrary, as that currency also benefited from a flight to quality and so frequently strengthened in line with gold.
GFMS feels the key to the ongoing price strength is the extraordinary monetary and fiscal policies being enacted by the industrialised world’s governments in the face of sluggish economic growth, the spectre of a double-dip recession and already uncomfortably high unemployment.
>> It’s hard to see how price gains can be sustainable
Not really. Just trust me, from this point on, the price of gold is only going to increase.
Just like housing in 2006.
Or dot-com stocks in 1999.
Oh wait...
And while I am at it, I should be ready to JUMP the next time a Pump and Dump boiler room calls me too.
Because I am an idiot.
Dude. Didn't you read? It COULD go from 1250 to 1300!!!!!!
Better jump on that Wells Fargo wagon or you could get left standing in the dust.
Let me guess...ya’ll were probably saying the same thing back when gold was at the record high of $900 an oz, right?
Of course the Fed creating trillions in fictional money to buy back US debt will have no effect on the value of currency, right?
What were you doing when it was $300 or $500 or $1,000?
Opportunity disdained is opportunity forfeited.
That's just the point. The Time Machine does not work. The real money has all been made, according to my metals dealers.
There are people who spend their entire careers studying and investing in these markets. Small retail investors never win big. Note all the TV advertising now.
By the time we hear about it, the well-connected have made their money.
Maybe my situation is unusual. I have a choice of taking a flyer on a precious metal whose market value is higher than fundamentals suggest it should be. My other choice is to invest in raw material base metals for my business and triple my money every single time, every month, regardless of the Market price.
Why should I, in my situation, buy a metal I do not use?
Note, I said "Metal". Not paper that says it's metal.
If people want to invest in gold or platinum METAL, that's another thing. At least it will never go to Zero Value.
I think when there is this much retail advertising, plus deliberate "News" stories it should turn on all kinds of warning lights that scream "MADOFF".
gold is not an investment vehicle. it’s more like a life raft.
buying gold is about keeping your buying power at the time you bought it. for instance, when 0bama took office he immediately doubled the cash supply by printing another $1 trillion dollars. prior to that point, there was about $880b in cash in the system. this effectively cut the dollar in half... forcing you to lose roughly half the buying power of your cash in your bank.
if you had bought 1 gold coin right then, it would have cost roughly $700. today, that same coin would be worth $1270. but it’s not about the investment... it’s about the buying power.
in 2008 a loaf of bread cost $1.59. that means you could have bought 440 loaves with the $700 you had in 2008. today, bread costs $2.89/loaf. that $700 would only buy 242 loaves... showing a loss of buying power. BUT, if you had bought the gold coin then... and sold it today, you’d be able to buy 439 loaves of bread. you’re buying power has been saved.
the average salary in 1925 was about $1200. which is $24/week. back then, the $20 gold coin was worth... $20.13 (the gold standard, dontcha know). that single gold coin was paying for the food and shelter of the average American family for 1 week. today, if you had the same 1 oz of gold (forgetting collectors value)... could you feed and shelter a family of four on $1270 per week? that would be about $63,500 per year. strangely enough... the average salary today is reported to be between $55,000 and $65,000.
it’s not about the pieces of paper... but what you can buy with it... your buying power. it may fluctuate a bit, but it usually stays in the relative vicinity.
Being honest, I said it when it was $400. It's still worth $399 to me. That's what I'll pay for it.
Yes, the "Week's Work for a Troy Ounce" has always been a rule of thumb. I do not dispute that, but after all these bubbles I am not betting on that any more. We have found that too many formerly accurate rules have collapsed.
I no longer have a position in Gold. I could well be wrong. If so, I have missed an opportunity, but kept my shrinking money.
This smells like people are going to get hurt, to me, and I cannot shake the feeling, and it is a very strong one. I do know that base metals are being manipulated,(Copper, tin, zinc, nickel, cobalt, etc.) and these are common and uninteresting not "Hot" items. It therefore follows that a romantic metal is more susceptable. The TV commercials are getting louder. The gold bugs are screaming. Of course they are. They paid a LOT for the investment. They have to get out before the music stops. These are bad signs.
End of the year?
Could be by Friday. :)
Most people in this country don’t realize the value of gold. Since 1933 the government has propagandized that gold is bad. The reason was to keep everyone believing monopoly money is the real thing. Good luck preserving your wealth when the fed starts increasing the money supply a trillion dollars a week.
When things get that bad, where will you be able to sell it?
>> I can’t see why its price would collapse anytime soon.
>> Let me guess...ya’ll were probably saying the same thing back when gold was at the record high of $900 an oz
You guys are right... I stand corrected.
It’s different this time!
The gold bubble is different than all the other bubbles that men have inflated since the dawn of economics.
;-)
ROFL!
(But tell me: is that supposed to be a goldbug in the middle square, or a skeptic?)
The gold bubble is different than all the other bubbles that men have inflated since the dawn of economics.
It IS!! It IS!!!
Financial people and commodities speculators are your FRIENDS! They are SELFLESSLY giving you advice because they LIKE YOU!
Just like they did with the South Sea, Tulip Bulb, and derivative things!
"Call TODAY! Operators are standing by!!! But WAIT! There's MORE...."
You realize these posts upset people with positions. But wouldn't it be morally wrong to not question these things?
At 1200 an ounce gold is consitant with it’s purchasing power historically. 150 years ago an ounce was worth about a week’s wages for a highly skilled worker, or a months wages for an unskilled worker. It was about the cost of a top quality hand tailored suit. Ditto 100 years ago, 75 years ago. 50 years ago it was illegal to own gold, but once it was made legal the price was still the same adjusted for inflation. After a brief bubble in the 80s (a real one), the price dropped below it’s historical norm, until a few years ago. Now it’s back there. That’s not a bublle.
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