Posted on 06/13/2010 2:00:01 PM PDT by blam
Gold Going to Parabolic Top of $10,000 by 2012 For Good Reasons
Commodities / Gold and Silver 2010
Jun 13, 2010 - 03:05 PM
By: Lorimer Wilson
No wishful thinking here! As I see it gold is going to a parabolic top of $10,000 by 2012 for very good reasons - sovereign debt defaults, bankruptcies of “too big to fail” banks and other financial entities, currency inflation and devaluations - which will all contribute to rampant price inflation.
Not surprisingly, I have company in that view:
Money manager, Peter Schiff, told Business Week recently that, "Gold could reach $5,000 to $10,000 per ounce in the next 5 to 10 years” and highly respected economist David Rosenberg is of the opinion that "There is no doubt that gold can easily double from here."
THE CAUSES
1. History is No Guide
Gold has only been trading freely since President Nixon's 1971 decision to deny gold to the French and others attempting to repatriate their paper dollars for the metal. As such, there has been a scant forty years of gold production and trading since it was detached from supporting paper money. This period has also been marked by substantially higher monetary and price inflation as well as currency devaluation.
2. Market Manipulation
The Commodity Futures Trading Commission (CFTC) recently held a major hearing which blew the doors off bullion metals futures trading markets in terms of what was revealed publically. I predict this public hearing will be viewed in the period ahead as the precious metals price liberation event of the decade.
It is commonly known that JP Morgan Chase in the major player in commodities futures markets trading. Not only do they take massive naked short positions (betting that prices will fall), they do it with large substantial leverage. What isn't as well known though is that Chase acts as the agent for the Federal Reserve Board and other central banks in 'managing' the markets on their behalf. Central banks want 'orderly' precious metals markets and prices and currencies which don't gyrate wildly. Only then can they achieve stealth inflation in their monetary policy which is so beneficial in servicing debt. It also makes for good (meaning effective) politics.
3. Insufficient Physical Inventories
While it is normal for traders to roll their expiring contracts over into new paper trades, some traders accept cash in settlement rather than the metal. To the amazement of everyone the recent hearing of the CFTC - specifically Jeff Christensen’s comments - inadvertently confirmed that there is little bullion in storage at the London Metals Exchange or New York's COMEX to back the metals trading. He justified this fact by noting that only one ounce of one hundred traded is paid out in physical metal. This revelation confirmed a much worse reality than even critics, such as the Gold Anti-Trust Action Committee (GATA), had expected. It seems that the Asian and Mid East buyers and owners of bullion have been removing gold from their dealers’ vaults and are taking it "home" thus leaving much less than previously thought in the London, New York and Toronto vaults.
In addition to what looks like a production peak in the gold mining industry (production has fallen in 5 of the last 8 years), central banks have for the first time recently become net purchasers (having bought more gold last year – 425 tons – than at any time since 1964).
The single largest purchasers of metal these days, other than central banks, are the bullion ETF's (Exchange Traded Funds) which ostensibly have their metal inventories in vaults. These relatively new investment vehicles, unfortunately, are not transparent in their business practices. Regular audits by reputable accounting firms and allocated and segregated bullion inventories stored in reputable vaults are opaque at best. This begs the question: “Do the large ETF bullion funds actually have the metal they purport to own, or is their inventory more the 'paper gold' variety in which bullion trading exchanges seem to specialize?”
THE EFFECT
1.The revelation, outlined above, that there is insufficient physical inventory to meet new investment demand for ownership and delivery of physical bullion, is about to blow the price lid skyward.
2.As public awareness of sovereign debt mounts, it will drive home the reality of mounting government insolvency.
3.Confidence in currencies will wilt commensurately.
4.Investment demand for real gold and real money as a safe haven investment will expand exponentially.
5.These events should take place from mid 2011 through 2012 and extend further out toward 2015 before demand is satiated.
6.The dramatic price increases in gold and silver will at that point also satisfy the unstated desire of central banks and politicians to devalue their currencies in order to assist them in meeting their debt and unfunded liabilities.
After the 2008/2009 crash, governments bailed out their failing financial institutions and investment banks through a variety of innovative measures. The next time round most governments will not be in a position to do so – again. Even more troubling, the IMF (International Monetary Fund) will not be capable of rescuing the increasing number of insolvent governments and their financial institutions.
Conclusion
You may think my aforementioned views are crazy or perhaps just that my imagination is way out of hand or, at best, that I don’t have access to the appropriate reality checks. Be that as it may, I am increasingly confident that the consequences of fragile sovereign debt, precious metals market manipulation, insufficient physical supply, and the need for a safe haven investment refuge, will drive precious metals bullion and mining stock to unimagined heights.
The circumstances immediately ahead are largely unprecedented. History is therefore only marginally useful as our guide to the future price of precious metals. We are now in genuinely unchartered territory.
Get yourself positioned to take advantage of this event of a lifetime. Protect your assets from the next and more serious leg of the 'Greater Depression' directly ahead. Get a running start NOW on growing your future wealth.
Goldman: A Slowdown Now Would Be Deadly, Given That Governments Are Out Of Ammo
The gold bugs are a-bitin’?
Wonder if any of that black gold washing up on the Gulf Coast can be harvested/mined?
...and you think they’re not going to take steps to prevent this from happening? Soaring gold prices are an impeachment of the credibility of a currancy. Soaring gold says loudly the paper money is an unbacked hoax.
This administration, above all others, has the gall and hypersensitive reactions to re-confiscate gold.
Watch it happen.
Let me know what you figure out...I smelled the oil fumes at my house this morning.
Very much so... If they were serious, they’d realize that gold is a fiat currency - it has no real-world value other than what we attach to it. In all ways silver is a more valuable, useful commodity: higher conductivity (thermally and electrically), hardness, brightness, antibacterial, molecular weight, and current price.
Try to barter with a ounce - or even tenth ounce of gold; it’s like trying to buy groceries for two days with a $1000 or $100 bill. A lot easier to use silver, available in small denominations.
For metals freaks, the upside in silver is much bigger, and it has actual high-volume industrial uses as compared to gold. Gold is literally like diamonds - small real-world application, valued high simply because it’s a fiat value - deemed to be high because we want it to be high.
Silver, copper, lead - those are the metals that have big upsides.
Gold strikes me as a metal you want when you plan on long-term investing as its value goes up over time, but it’s not something you’ll want to use for day to day activities. Problem is, if TEOTWAWKI takes place, the whole system that puts value on gold also goes away. In such a case, I can see a case of whiskey and a jerrycan of .45 ACP getting you a lot further than the equivalent amount of gold by pre-collapse value.
If gold hits 10k/oz. by 2013 I’ll eat my shorts. My Email address is: _____________________ LOL.
$10,000? Talk about picking a number out of thin air.
Confiscating it will be very difficult.
Preventing gold holders physically within the 50 states from realizing any spendable money from it will be very easy.
Or, "This time it's different, baby."
That's the line of every scoundrel. And he uses it at the top.
When I read this kind of stuff, I ask “How much gold does the author own?”
The author is trying to talk up the price of gold. There has been a lot of talk lately, and the price is now at roughly $1200. Hard to see how they can improve on the fear that we have now. In the US, we obviously don’t have the inflation which would justify the high prices that are prevailing. The only things that might lead to a higher price in my mind are 1) US inflation, and 2) foreign inflation. There is little evidence of US inflation at this point, but the gold market is a world market, and inflation certainly is possible in some of the other countries of the world. Even so, at this point, there is not much evidence of it.
I don’t imagine there is much risk in owning a small portion of your portfolio in gold, but I would certainly not want to bet the farm, as some have done or advised others to do.
I am also suspicious that at some point, it will become apparent that some of the gold suppliers are just as fraudulent as Madoff. It is easy for the criminal element to sell fake gold, as demonstrated by the discovery of gold plated tungsten bars of late. Some of these outlets don’t actually deliver the gold. They claim they are holding it for you, but who knows? Some of them are simply selling you paper that represents gold. Maybe they own gold to back their obligations, maybe they don’t. If not, then how do you know they will make good on their paper obligations? And if you do take delivery, then you have the risk not only of fake gold, but also the storage and theft risks. Another factor not often appreciated is that the fees for selling gold can be substantial—much more than the fees for purchasing it.
Why not..... $20,000 ?
What's his position? How much did he get stuck with today at $1,227? Well, somebody has to ask....
Industrial metal prices have industrial factors tied into their price/value which can be bad for an investor in an industrial slow down.
The only way this would even remotely be likely is if the S really HTF, and even then, much more humble, useful subsistence items would be far more desirable.
That's not to say that those who have held gold for, say, the past ten years haven't profited handsomely. But this sort of thing has been a pretty reliable indication of a top in the past.
I predict it will be at $20 trillion by next year. Go get ya some now!
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