Gold USD10,000 !

Discussion in 'Economics' started by Onlygold, Sep 16, 2009.

  1. Onlygold


    The problem with most people (except the gifted) is that the mind is very much influenced and limited by what is the seeming current situation.

    A classic case would be this current stock rally from March 09. After some time, everyone (including N. Roubini et al), threw in the towel and no one dare to talk "market crash". You now only read about "...recovery has started...though weakness to remain", "worst over...". The reason is simple and not simple at the same time. It is simple if your are an insider like Bernarke, Geithner, etc... Given what insider informations they posess, some knowledgeable in this ET forum may even foretell what is to come. This is the difficult part - most are not trained in finance nor have the most critically needed informations. So we only had to rely on what is seemingly obvious, the stock market has moved up, things getting back to normal.

    Relevant to this stock market rally, I read (a month ago) an article (Market Oracle or Financial sense ?) which argued that this Quantitative Easing by the FED cannot be stopped - it had to be a "permanent" feature in fiscal policy (the author seemed knowledgeable but not me). If it is so that QE has to be "permanent" in order that things don't collapse, then there's trouble. What trouble I don't know.

    Back to gold. What if I suggest that gold will be USD10,000 in 2020. Incredible ! Yes ! As most of us are are very much imprisoned by the present and also most are not expert. That's the problem !

    Gold was USD200 - 250 in 2000 and now USD1000, a five-fold increase. The economy / DJIA had a bull run from DJIA 500/1000 in 1980 to 14000 by year 2000. That was a non-stopped 20 year credit driven bubble and year 2000 is the top and 2007 is the double top and things have come to a head. It was global money supply that moved it. The fiscal situation in the US is worst than in year 2000. Add to that there is the USD reserves held by China, Japan and others that compound the fiscal situation of the world. Everyone had to follow the US to print money (can someone please confirm) in order to maintain some sanity in the forex market. All these will mean turmoil in currencies market or monetary reform, etc. Bullishness for gold and stronger than at the start of year 2000.

    10,000 = (1000 x 5) x 2.

    My analysis is only amateurish. My point is we are easily confined by the present and cannot see far ahead - except for the gifted.

    My prediction from crystal grazing is gold USD2000 in 2012.
  2. As insane as you sound, you are probably not far off from telling us the truth! It is possible that gold could fly to 10,000. Gold 2k by 2012 is almost a certainty. I personally think gold will hit 2k by next year and probably hit 1200-1300 by end of this year.
  3. I do not know where GC is headed. But I hope to see more flamboyant threads started about the subject. I am serious...
  4. Onlygold


    Every once in a lifetime comes an exceptional opportunity - we catch it or miss it. Now is one of those moment involving investment. Say, you have a 500k / 3million cash or tied to equity for long term investment. Where should we best put it?

    My very crude attempt :-
    1) Short term trading in the long run is best if picking tops and bottoms is your second nature !
    2) never in US equity ! The reason is simple, the double top of 2000 / 2007 is enough to mean it won't breach that for the next 10 years until they clear things up. Things can't be cleared within the next 10 years ( an attempt below).
    3) turn everything into hard gold metal. The days of the USD as reserve currency is numbered. Somehow, there should be some sort of international "agreement" to clear this mess about the trillions of paper the other countries are holding. You cannot substitute paper with paper - not the Euro, Yen or Yuan. If not a paper settlement, the agreed international monetary settlement, by default, must be gold or part by gold.

    Gold is cultural. Ask yourself why central banks don't continue to auction gold like the way Gordon Brown did 10 years back. They know what is valuable. China encourages citizens to buy gold so some yuan money get diverted from chasing the stock market, etc. The Chinese government cannot "put 2 trillion eggs in one basket", but you can and this is the once in a lifetime opportunity - catch it or miss it.

    This global financial and monetary crisis (if there is actually one and we are still in it ?) may take many years before it can be resolved or just to reach an agreement on how it is to be resolved. Ten years here is a short time. The next 10 years may prove to be the most tumultuous years since WWII just as the years of the Great Depression (I don't buy the Mayan calendar but it just coincides !). Things in the world don't look all rosy. As long as this monetary mess is not settled, for gold to rise 10 years is not unimaginable - we are talking of at least 10 years !.

    If you run a ponzi scheme, how would it be stopped! When you are caught! And who catches you? The police (if they're not asleep!). When the government runs a ponzi scheme, how would it be stopped? When it is caught! How is it caught and who will catch the government? No one catches them ! A Government don't changed unless they are forced to change like when Japan surrenders. So when governments of the world all are running ponzi schemes and quarreling, they will only blame and try to catch or corner the next unfriendly governments. They don't generally resolve disputes in an amicable manner. The solution is usually like choosing the least harmful of the worst after everyone is badly mauled and bloodied! So 10 years in playing these games is not a very long time and for gold to rise 10 years is not too bad a bet.

    I am not professionally qualified in these matter. Ask your brothers, sisters or close friends who are reliable.
  5. I have one question: Do you think the USA will get its financial house in order in the next 5 or even 10 years?

    If not, then the answer should be obvious.
  6. $1,200 to $1,300 USD is more realistic, It keeps on smacking the resistance line, odds are it will break out where to ?. Silver and Platinum have enjoyed their ride on the back of Gold interests. Out of the three I pick (Au) for right now. As for gold reaching $10k+/oz. it would be nice.

  7. Onlygold


    The US financial house will eventually recover, but it may take more than 10 years. And in what manner?

    A recent financial journalist argued that it is flawed to assume the US ever need to repay or bring down its national debt just because the National Debt/GDP ratio is way too high - the end of the world won't happen! The GDP just need to outrun the national debt just as it did which ended the Great Depression of the 1930s'. But the author seemed to forget that it also took a full-fledge World War! As for the start of the GDP recovery, the article assumed now! - just simply because of a hiatus after a free-fall

    It is correct the US will finally recover with the (nominal) GDP growing to make the national debt take a backseat. But this can only come after a global "consensus" or "economic ceasefire". The foundation of the US economy by then would be back to "normal" where people live and work normally - not betting their hope on financial engineering. Along with the growth in nominal GDP, the gold price will find its new level to match the new global economic reality. It will be longer than 10 years and gold will be more than USD1000/oz.
  8. Onlygold


    The stock market has stabilized and commodities have to come back down to earthly reality just as an unfounded USD147 oil had to crash back to USD32. Gold too had to come back to "reality" - it has already made its bull run with a five-fold increase. Do you expect more - that it shoot through the sky and hit USD10,000/oz ! Everything that goes up must come down, including gold! And so they say.

    Let's see. Oil has a fairly stable short term (as well as longer term) supply. So is oil demand - you cannot guzzle more gasoline than the number of autos on the road and power stations you have and they are not built overnight. This is enough to explain the surge to USD147 for the oil price to be just speculative play and had nothing to do with the fundamentals of oil. Gravity then played its normal role and brought it back to the current USD70.

    What about the gold price. The rise of gold price from the year 2000 till the present is not speculative play. But rather the rise came about through the failure of speculative play! A play that tried to cap the gold price within a band of USD200/300 for decades (I learn it looking at the gold chart and the spikes !). Fiat money and the current banking interest don't co-exist well with a rising gold price. So now the laws of gravity don't apply as it did with oil. It is the law of natural dynamics that takes over because of the fundamental changes in the conditions that determines its trajectory - which is up! It may have more than 10 years to go.
  9. I'll tell you why I think it can go to at least $1200 to $1300 in the short term. When gold hit about $900, I saw some firms open up in our town whose express interest is in buying gold. Heck, I've thought of putting my own ad in Craigslist and buying gold at like $200 under spot. One firm, in particular, is a "new" coinshop in my neighborhood. But I can tell you as a coin collector...they don't know what they are doing with coins...they are just there to buy the gold and periodically place coins into their inventory when it is worth more than melt. They ship the gold out of town.

    What is my point? My point is that this shop has been open for several months now, and I don't see the foot traffic I used to see. The reason is that they pretty much reached all the people they can with their television advertisements. All of the scrap gold in loose hands in our town has been sold. I imagine that this is being repeated in many towns across the world. Once the scrap is gone and purchased by the investors, the only remaining place to get it will be from the ground.

    Again, my point is that one of the key sources of supply...the scrap market, is almost exhausted not because the price of gold is high, but rather, because the price has been high for so long.

  10. Onlygold


    It is always refreshing to read real town story - peilthetraveller getting his first target price.

    I see over TV how the rising gold price brought Koreans to sell their gold jewelry, maybe to tide over bad times when the crisis hit. I was thinking pity they need to unload.
    #10     Sep 17, 2009