Posted on 06/25/2012 6:39:35 AM PDT by blam
Ben Davies: Gold Is Worth $6,000
Matthew Boesler
Jun. 25, 2012, 7:56 AM
Ben Davies, CEO of Hinde Capital, spoke to King World News yesterday giving his thoughts on where gold is headed next. He is somewhat bearish, saying gold could fall over 10 percent to around $1400 per ounce as Europe continues to muddle through its crisis.
Davies told King World News:
If you look at it on a relative basis, gold has maintained its purchasing power. It’s done exactly what it should be doing. Short-term I am concerned that we could be going down to $1,400. Yes, that’s a real risk in this environment...
Unfortunately, the way it’s going we’re just constantly protracting out this problem. So while that’s happening and the solutions are completely wrong, the risk is this constant weight of deleveraging, and that is weighing on all assets.
However, Davies is still bullish on gold as a long term play, saying that Asia is still a major buyer and that gold could go above $6000:
But people are ultimately exiting out of these fixed income assets, this sovereign debt, and they are going to be going into gold. I can see that the Asian demand is still very palpable. In fact it’s increased from last year quite dramatically. That is the buyer in the market. The question is, will they (China) be there over the summer months?
Look, if you were to run M4, M3 numbers, etc, and assert a value to gold on an appropriate metric relative to that, obviously gold would be at stupendous prices. I believe that gold has considerable room to go to the upside, four or five times (Gold price above $6,000). I think that’s not an inappropriate suggestion.
(Excerpt) Read more at businessinsider.com ...
Ah, the old “it’s worth 4x today’s price, but it may decline sharply” call. Very helpful.
If he wants some gold at 6000 dollars an ounce, I will be happy to sell him as much as he can afford at that price.
I’m curious how much tungsten gold was sold and how that affected the price. And like the silver hoax that when on for a decade, are there any undiscovered gold scams where the broker either never bought gold on behalf of their customers or did not buy enough to fully cover their obligations.
Very wishful thinking. I suspect that gold is already in a bubble that is going to burst, for the simple reason that, outside of electronics and some chemical applications, it is pretty useless.
During the age of Mercantilism, when the value of gold was determined by its scarcity, and it backed currency, it was a different situation. And while most economists would say that the age of Mercantilism is over, I would disagree, and say that the concept of Mercantilism still exists, but is no longer limited to specie.
Expanded Mercantilism is no longer limited by just commodities, either, but has dynamic elements such as economic activity, productivity, and research and development.
In retrospect, even the concept of Mercantilism that whoever had the most specie was the most powerful, may have been in error. The power was derived *not* from the having of specie, but from the *mining* of specie.
The ability and will to mine becomes the center of economic activity in a nation, with its benefits expanding like ripples on a pond from a pebble. Literally, a growing nation mines, and a nation in decline mines less.
To make matters even worse, gold has become utterly disconnected from the market, outside of the people who buy it and sell it.
-—outside of electronics and some chemical applications, it is pretty useless.——
You sound like a guy ;-)
I have known Ben since the early 1990s when he was trading US Treasuries. He is an extremely bright guy. He did not say he would pay $6,000 per ounce, he said it is worth $6,000. Since Ben started his Gold fund gold has doubled from $800.00 to $1,600. In the same time the Dow has gone from 13,565 to 12,483 [that is after falling to 6,600]. My guess is that if you would say something like > “I would sell all he wants at $6,000!” You probably don’t have any to sell him at the current price.
Ah, “it’s a new world”. Somehow people have fundamentally changed. Me, I’m a conservative, and I will continue to bet on something that has maintained its value, everywhere for at least 5000 years. But that’s just me. If you are so certain gold is a bubble then I suggest you pile into DUST and get rich.
Gold has held a continuing purchasing power for 5,000 years. Reach into your pocket and pull out whatever currency that you have in there and the same cannot be said. Man cannot make things to be used for bartering that maintain purchasing power. Gold is just as scarce today as it was at any other time when you take into consideration the population increases. What has happened to the purchasing power of your currency just in the last 12 years?
Antibiotics: $136,000
7.62mm semi automatic: $75,000
water treatment device: $64,000
3kw generator: $1,242,000
All just as likely.
Gold has been periodically overvalued, and that value has crashed upon occaision for five thousand years. It did jack sh!t for the Gypsies and the Jews in WWII.
You may pick up your door prize on your way out, and thank you for playing.
Next contestant.
You may pick up your door prize on your way out, and thank you for playing.
Next contestant.
You may pick up your door prize on your way out, and thank you for playing.
Next contestant.
You may pick up your door prize on your way out, and thank you for playing.
Next contestant.
My complaint was just that he takes the analyst’s cop-out of pointing to the possibility of huge price gains and significant downside risks, in the same sentence.
If he’s so sure that it’s worth 6000 an ounce why would he worry about a decline to 1400?
For the Jews who used it to get clear of the Nazi sphere of influence *before* they got put on a cattle car: gold and silver were a matter of life and death.
I imagine he’s warning the stakeholders of Hinde Capital about the plausible effects of forced Gold liquidation by struggling hedge funds - so that the fund doesn’t have to deal with a load of redemptions.
I recommend listening to the whole interview, rather than this summarized version. It’s on King World News.
On the contrary: precious metals (Gold and Silver) are money. Which is to say: they are very useful indeed.
Precious metals possess all of the attributes of money (fungibility, portability, store of value and so forth)
Fiat currency has most of the attributes of money, but it does not act as a store of value. After a few years a dollar bill has only a fraction of its original buying power. However an oz of Gold from (e.g.) the time of the Incas retains its buying power.
Something that has the attributes of money is valuable because it has those attributes. Would-be barterers can use money to overcome the otherwise insuperable problem of discovering a Coincidence_of_wants .
Trade requires money. Let's examine this vital function of money with respect to the coincidence of wants:
Chicken farm example:
You run a chicken farm, and you need to buy a great many things to keep your farm and family going.
In a given month you need - for instance - to buy chicken feed, to hire someone to repair your generator, to buy a nailgun to allow you to mend chicken barn #9, to hire a midwife to help give birth to your widowed daughter’s baby, to buy milk and bacon - and so on.
Some of these resources will be buyable with chickens or eggs. And some of them will not - there's no coincidence of wants if the midwife or the nailgun owner don't want chicken meat or eggs.
Remember: these people need to replace their consumables in order to stay in business: they can't use your food to buy more nails or WD40 or painkillers or whatever they need from their suppliers a hundred miles away.
But all or most of these resources will be buyable with money - with Gold or Silver. This is because offering money as part of a transaction vastly improves the chance of a coincidence of wants
Chicken farm example - continued:
You’ve had a successful month at the farm, and you now have loads of chicken meat and/or eggs to sell.
100 people line up to buy what you’ve got.
* 50 of them have horribly devalued fiat money, food-stamps and a bad attitude
* 40 of them have plans for barter - some of which are better than others. One is willing to work on your farm for food: another is willing to sell you their body, another has a stack of AA duracell batteries, another has some miniature bottles of scotch - and so on, with dozens of variations. You have to gauge each transaction on its own merits - an exhausting process - and half of the barter offers are simply going to be unworkable.
* 10 of them have Gold and/or Silver.
Which customers will you prefer selling your produce to? They all want what you've got - but do you want what they've got? Again: real money vastly increases the chance of a coincidence of wants.
In summary:
Only Gold and Silver fulfill all of the prerequisites of money. This gives them inherent value - useful (for instance) in a survival situation.
As we know: fiat currency can also be used to run a chicken farm - but fiat is currently losing at least 7% of its buying power a year. Once price inflation reaches a certain level, only real money will be accepted as money.
Hope this was helpful.
The Jews and Gypsies for whom gold bought anything rather than simply being taken and slaughtered anyway were a minority so tiny as to be statistical;ly insignificant.
History recorded what happened to the vast majority.
Ii will choose weaponry, fuel, food, medical supplies, and ironmongery over pretty things in a pinch.
Guess again. LOTS of stories of Jews trading their gold and silver and helping them survive or escape.
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