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$400 gold?

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  • Wed, Mar 11, 2009 - 12:19am

    #1
    ltlredwagon

    ltlredwagon

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    $400 gold?

I am familiar with all the reasons why there will be $2,000 – $3,000+ gold in the future.  Makes sense to me.  I’m on the gold/silver bandwagon, but I must say I always get a little worried when EVERYONE seems to be on the bandwagon and this is NOT an area in which I am an expert, even though I made what I think is a well-reasoned decision based on the data I have. 

Are there any respected persons on the other side?   Anyone saying, "You guys are all just freakin’ out – most likely this and this and this will happen and gold will drop back down to the $300-400 range."    Is there any valid point of view which sees gold never reaching the spectacular highs all are expecting, but just settling down and/or drifting back?  Has anyone reasoned out a set of circumstances or series of events which would significantly stabilize/lower gold prices, or precipitate a collapse? I know that one of the best things about this forum is that it accomodates a wide variety of viewpoints:  who is the best spokesperson for the "other side"?    

  • Wed, Mar 11, 2009 - 12:36am

    #2
    Peak Prosperity Admin

    Peak Prosperity Admin

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    Re: $400 gold?

To my mind, in the short to medium term, the market is the best spokeperson for the "other side". Look at a GLD chart or some of the nynex gold ccharts and see what you think the trend is.

LT, Iam long gold but, as I posted elsewhere, ST, I’m short via GLL. Feb through August are often weak times for gold (not last year, tho!).

JMHO. You may get other opinions here and it’s your $$.

GLTA.

SG

 

 

 

 

  • Wed, Mar 11, 2009 - 12:50am

    #3
    Peak Prosperity Admin

    Peak Prosperity Admin

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    Re: $400 gold?

Why is gold value falling so rapidly?

  • Wed, Mar 11, 2009 - 01:15am

    #4
    Peak Prosperity Admin

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    Re: $400 gold?

The case for the other side is "we’re in massive debt deflation."  We are not in inflation…yet…the extra credit the Fed is magically creating is dwarfed by the size of the credit bubble that’s bursting.  As long as deflation rules, gold will settle back down, though I highly doubt it will drop to the degree you’re asking about.  

The other piece of data is that bull sentiment is 80-90%…there’s not much left to drive gold higher…in fact overly bullish sentiment is, as you suggest, a bearish potential.  

As cape says, long term, gold is inevitably going to be worth a lot…the foundation of the global monetary system (the $) is on its last leg. 

  • Wed, Mar 11, 2009 - 02:12am

    #5
    Peak Prosperity Admin

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    Re: $400 gold?

I’m not sure whether anyone would call me a respected personSmile, but I’ve been hesistant to jump into a position much above $700. I’ve been waiting for a good pullback.  In the short term, I think gold is in a trading range between $650 and $1000.  But a pullback to $400 would seem ridiculously oversold to me, and a tremendous opportunity. 

We’re experiencing the effects of disinflation and deleveraging at the moment, and that may continue for awhile, but I think hyperinflation is inevitable based on what the Fed has done.  The Fed or IMF could start dumping gold on the market, and that would definitely bring the price down, but that would only further weaken their hand in the long run.

 

  • Wed, Mar 11, 2009 - 02:17am

    #6
    Peak Prosperity Admin

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    Re: $400 gold?

Yeah… but isn’t inflation relative to the inflation of currencies held against the dollar?  If we’re experiencing inflation we might not recognize it because the rest of the worlds’ currencies are inflating at a faster rate which keeps the dollar value higher (relatively)????

  • Wed, Mar 11, 2009 - 02:53am

    #7
    Peak Prosperity Admin

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    Re: $400 gold?

Gold is experiencing a pullback right now which is perfectly normal, I personally see it pulling back to the $850 level, right around where the 200 day moving average is.  If Gold falls below the 200 day moving average, and can’t get back above it relatively soon, then I would start to worry.  However there is a major support level at $700 that should hold.  Right now if Gold pulls back to $850, then the next natural level it should reach is the $1200-$1300 range.  When the money that the government has printed recently starts to create inflation then that is when gold is truly going to sky rocket.  I have read that Gold can go anywhere from $2,000 and ounce to $15,000 an ounce.  Things tend to overshoot, just look at gold in 1980 to see how fast it shot up.  Then Paul Volker came in and offered bonds at %15 which absorbed all the excess money the government printed in the 1970’s. Then gold went way down and was never heard from untill ten years ago.  Look for something similar like this to happen in the future, where the chairman of the fed raises interest rates to pry people away from the gold market.  Who wants to hold onto a Gold bar, when you can get %15 in your savings account.  However if true hyperinflation does occur then you will not want to trade your gold for dollars because they will be worthless.  Look to history, this has all happened before and it is happening again.  Just make sure to watch the graphs and to sell when it best makes sense to you.  Remember pigs get fat and hogs get slaughtered, aka don’t get too greedy. 

  • Wed, Mar 11, 2009 - 02:59am

    #8
    Peak Prosperity Admin

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    Re: $400 gold?

Caroline,

The Federal Reserve has increased the Adjusted Monetary Base in excess of 100% from year ago levels.  That is monetary inflation. Other currencies are also fiat, but float based on an exchange rate relative to US dollars.  The fact that countries have or will adjust the value of their currency through exchange rates means very little in the end. Our currency is the basis for others, and our monetary base has been inflated.  Just to put this in perspective, the link below shows a chart of % change going back to 1918.  What the Fed has done recently is unprecendented.

http://research.stlouisfed.org/fred2/fredgraphfile?&chart_type=line&graph_id=0&category_id=&recession_bars=On&width=630&height=378&bgcolor=%23B3CDE7&graph_bgcolor=%23FFFFFF&txtcolor=%23000000&preserve_ratio=true&&s_1=1&s%5B1%5D%5Bid%5D=AMBSL&s%5B1%5D%5Btransformation%5D=pc1&s%5B1%5D%5Bscale%5D=Left&s%5B1%5D%5Brange%5D=Max&s%5B1%5D%5Bcosd%5D=1918-01-01&s%5B1%5D%5Bcoed%5D=2009-02-01&s%5B1%5D%5Bline_color%5D=%230000FF&&s%5B1%5D%5Bmark_type%5D=NONE&s%5B1%5D%5Bline_style%5D=Solid

 

  • Fri, Mar 27, 2009 - 12:10pm

    #9
    Peak Prosperity Admin

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    Re: $400 gold?

I know most of memebers here trade in USD, Can any one give suggestions for those who do not have exposure to USD but to GBP?

Gold is all time high (more than double than 80’s level)  in terms of GBP and INR. For most of the world gold is bubble now and they are waiting for it to burst.

Any suggestions/analysis is welcome.

 

-sidds 

  • Fri, Mar 27, 2009 - 12:43pm

    #10
    Peak Prosperity Admin

    Peak Prosperity Admin

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    Re: $400 gold?

 

[quote]Anyone saying, "You guys are all just freakin’ out – most likely this and this and this will happen and gold will drop back down to the $300-400 range." [/quote]

My grandpa said that to me yesterday.
He’s a sharp guy – but I got to thinking – it’s not really the value of the Gold, it’s the paper buying it.

No matter how you cut it, Gold is worth more than greenbacks. Doesn’t matter if you exchanged $300 debt notes, or $2000.

Cheers!

Aaron

 

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