Gold looks set to move substantially higher as governments all around the world embark on a programme of "quantitative easing"
By Ian Williams
Last Updated: 2:18PM GMT 10 Mar 2009
Last July I wrote an article for telegraph.co.uk suggesting that gold had lagged other commodities in general and oil in particular and that gold would hit $2,000 an ounce over the next two or three years.
At the time oil was trading at $140 a barrel and using the gold/oil ratio I suggested that either oil was far too high or gold at around $900 was too low.
Since then all other commodities have collapsed in value, with oil showing the most spectacular collapse of all, falling to $35 a barrel, while gold is now higher with the price having moved up to about £1,000 an ounce.
[snip]
The British pound is about $1.38, which would be about $1380 an ounce. Gold dropped below $900 today. Ian is only off by about 50%.
Sure they can overshoot. But this whole "oh god, it is so bad there must be inflation" story is incoherent nonsense. If they got prices to rise even a third, the whole thing would be over like that.