More gold crystal balling...
Discussion
Two more articles out today, stating how it's gold all the way. Two articles below inserted directly onto the page to avoid PHer's from falling over from exhaustion 
They've both got basic elements of truth in my opinion, but how they can come out and be so "certain" Lord knows! It's like estate agents "telling" you how much a house is worth when nothing has sold in the area for months/years.
I don't think anyone really knows what is going to happen going forward, but it doesn't stop them from trying to guess!
If they're right however, we better not sell those goldcufflinks that belonged to Grandpa anytime soon...
http://www.beaconequity.com/smw/13754/Goldmoney-s-...
[b]"The result is in! At the end of the rainbow, the world will see a five-digit gold price, $11,000 per ounce as the 'fair value' of gold—for now—as the printing presses have yet to stop, in which case, more money printing translates to even a higher gold price down the road, according to Goldmoney President James Turk.
“Having filled the role of international money for 5,000 years, gold has been supplanted by fiat currency for the past 40 years because of government force,” Turk stated in an exclusive KWN report. “However, this nascent experiment with fiat currencies is not going well, as evidenced by growing global imbalances, unchecked increases in debt and financial derivatives, ongoing debasement of currency purchasing power and worsening monetary turmoil.”
So how does Turk assess a 'fair value' of $11,000 per ounce for gold, an asset which pays no dividends or interest?
Turk released his much-referenced 'Gold Money Index' calculation, a simple formula, really, in response to inquiries from his followers who'd like to follow his Index for estimating fair value of gold for themselves.
Turk demonstrates that by graphing the result of dividing total central bank foreign exchange reserves by total gold holdings of said central banks yields a trend line 'fair prices' versus the market prices for gold plotted over time.
Between the years 1971 and 1984, the correlation between the 'fair price' and actual market price appears uncannily close to 1.0, according to his graph. In other words, as central banks increased fiat foreign reserves, the market adjusted the gold price up to reflect the increased monetary level during that 16-year period.
For those who remember, back in the 1970s and for much of the early 1980s, the most watched statistic besides the BLS employment report and US Commerce Department's CPI and PPI, was the Fed's release of money supplies M1, M2 and M3, released each Thursday. Back then, everyone was tuned into the connection between money supply and gold.
Since 1984, however, Turk's chart shows the gold price in relation to money supply leveling off as sharply declining CPI numbers and interest rates set off the end of the 15-year bear market in stocks. The demand for stocks was greatly enhanced and encouraged by the passage of the tax code 401(k) in 1978 by Congress, which didn't go into effect until Jan. 1, 1980, further fueling stocks as most plans offered only stocks as a means for investing for retirement. Stocks were in, and gold was out of favor!
Early on, only eight million taxpayers utilized the tax-deferred law more commonly referred to as just 401k. But by 2005, more than 70 million participated in the government sanctioned plan as a way to defer taxes on earned income until after retirement, which ignited steady and voluminous amounts of cash into stocks—the gas tank, if you will, for the bull market in stocks. Few plans offered gold as an option throughout that time period, and may explain a good part of the divergence of retirement money going into stocks and away from gold on a relative basis during the stock bull market of 1984 through 1999.
As if on queue, the gold price took an additional beating from another method by which the spread between the price of gold and its fair value widened. UK's Chancellor of the Exchequer Gordon Brown's infamous sale of 60 percent of Britain's gold, unloaded at the very bottom of the market between the years 1999 and 2002, put additional pressure on the gold price for another three years. From its peak of approximately $850, set in Jan. 1980, the gold price reached a low of $255 in 1999.
But since the year 2002, the gold price has mirrored central bank holdings of foreign reserves, but the level at which the yellow metal started to mirror those reserves began at a much lower level than it otherwise would have, thanks to Brown's absolute bottom prices received for so much of UK gold reserves—a truly disastrous trade by the former superpower.
“Despite this remarkable rise in the gold price, it is clear from the above chart that gold’s undervaluation has barely budged for more than a decade,” Turk explained. “The reason of course is the growth in the quantity of national currencies held by central banks (the numerator in the Gold Money Index) is rising about the same rate as the weight of gold held by central banks (the denominator in the Gold Money Index). So gold remains tremendously undervalued.”
Turk's analysis dovetails quite nicely with another studied man of the markets, Swiss money manager Marc Faber of the Gloom Boom Doom Report, who told NewsMax in mid-September that, though the gold price has risen to above $1,800 per ounce (at that time), it still remained grossly undervalued within the context of historical relationships with similar and other metrics used by Turk.
“In fact, I could make an analysis to show that the price of gold today is probably cheaper than when it was $300 per ounce based on the increase in government debt, based on the increase in monetary base in the United States and based on the expansion of wealth in Asia,” said Faber when ask of his opinion regarding the gold price.
Mr. Gold Jim Sinclair, 20-year veteran bond trader Paul Brodsky, Sprott Asset Mangement's Eric Sprott, prolific financial author Steven Leeb, and former Head of Princeton Economics Limited, Martin Armstrong, to name just several, all hold price targets of $10,000, or above, for the price of gold when the day that all fiat money finally squares itself with central bank reserve levels. Sounds preposterous?
Sinclair was laughed at by outsiders of the gold community in 1999 following his prediction of $1,650 for gold by 2010. Fewer pundits dare belittle him today for his $12,500 gold price forecast.
Especially after the gold price broke $1,000 per ounce in Mar. 2008, many pieces offering methods of value for an ounce of real money have littered the web, with all, save a few, calculating the long-term gold price to five-digits—at least! So far, Richard Russell won't budge from his call for $6,000 for the yellow metal. But more time is all the 50-year veteran of the markets may need to come around to the thinking of Turk and the gang.
A final note about the Goldmoney president, James Turk: it can safely be said that Turk is a cautious, conservative and measured communicator with with his wide audience. He neither gets too excited nor despondent during the volatile moves in the gold price.
Of all people, if James Turk can demonstrate a $11,000 value to gold and confidently make the call, that estimate could turn out to be a bare minimum appraisal. But from time to time, he'll be out with another adjustment to his target price as he's done on several occasion already during this bull market."[/b]
Impressed you read all of that. Now, do you want to laugh or cry?
They've both got basic elements of truth in my opinion, but how they can come out and be so "certain" Lord knows! It's like estate agents "telling" you how much a house is worth when nothing has sold in the area for months/years.
I don't think anyone really knows what is going to happen going forward, but it doesn't stop them from trying to guess!
If they're right however, we better not sell those goldcufflinks that belonged to Grandpa anytime soon...
http://www.beaconequity.com/smw/13754/Goldmoney-s-...
[b]"The result is in! At the end of the rainbow, the world will see a five-digit gold price, $11,000 per ounce as the 'fair value' of gold—for now—as the printing presses have yet to stop, in which case, more money printing translates to even a higher gold price down the road, according to Goldmoney President James Turk.
“Having filled the role of international money for 5,000 years, gold has been supplanted by fiat currency for the past 40 years because of government force,” Turk stated in an exclusive KWN report. “However, this nascent experiment with fiat currencies is not going well, as evidenced by growing global imbalances, unchecked increases in debt and financial derivatives, ongoing debasement of currency purchasing power and worsening monetary turmoil.”
So how does Turk assess a 'fair value' of $11,000 per ounce for gold, an asset which pays no dividends or interest?
Turk released his much-referenced 'Gold Money Index' calculation, a simple formula, really, in response to inquiries from his followers who'd like to follow his Index for estimating fair value of gold for themselves.
Turk demonstrates that by graphing the result of dividing total central bank foreign exchange reserves by total gold holdings of said central banks yields a trend line 'fair prices' versus the market prices for gold plotted over time.
Between the years 1971 and 1984, the correlation between the 'fair price' and actual market price appears uncannily close to 1.0, according to his graph. In other words, as central banks increased fiat foreign reserves, the market adjusted the gold price up to reflect the increased monetary level during that 16-year period.
For those who remember, back in the 1970s and for much of the early 1980s, the most watched statistic besides the BLS employment report and US Commerce Department's CPI and PPI, was the Fed's release of money supplies M1, M2 and M3, released each Thursday. Back then, everyone was tuned into the connection between money supply and gold.
Since 1984, however, Turk's chart shows the gold price in relation to money supply leveling off as sharply declining CPI numbers and interest rates set off the end of the 15-year bear market in stocks. The demand for stocks was greatly enhanced and encouraged by the passage of the tax code 401(k) in 1978 by Congress, which didn't go into effect until Jan. 1, 1980, further fueling stocks as most plans offered only stocks as a means for investing for retirement. Stocks were in, and gold was out of favor!
Early on, only eight million taxpayers utilized the tax-deferred law more commonly referred to as just 401k. But by 2005, more than 70 million participated in the government sanctioned plan as a way to defer taxes on earned income until after retirement, which ignited steady and voluminous amounts of cash into stocks—the gas tank, if you will, for the bull market in stocks. Few plans offered gold as an option throughout that time period, and may explain a good part of the divergence of retirement money going into stocks and away from gold on a relative basis during the stock bull market of 1984 through 1999.
As if on queue, the gold price took an additional beating from another method by which the spread between the price of gold and its fair value widened. UK's Chancellor of the Exchequer Gordon Brown's infamous sale of 60 percent of Britain's gold, unloaded at the very bottom of the market between the years 1999 and 2002, put additional pressure on the gold price for another three years. From its peak of approximately $850, set in Jan. 1980, the gold price reached a low of $255 in 1999.
But since the year 2002, the gold price has mirrored central bank holdings of foreign reserves, but the level at which the yellow metal started to mirror those reserves began at a much lower level than it otherwise would have, thanks to Brown's absolute bottom prices received for so much of UK gold reserves—a truly disastrous trade by the former superpower.
“Despite this remarkable rise in the gold price, it is clear from the above chart that gold’s undervaluation has barely budged for more than a decade,” Turk explained. “The reason of course is the growth in the quantity of national currencies held by central banks (the numerator in the Gold Money Index) is rising about the same rate as the weight of gold held by central banks (the denominator in the Gold Money Index). So gold remains tremendously undervalued.”
Turk's analysis dovetails quite nicely with another studied man of the markets, Swiss money manager Marc Faber of the Gloom Boom Doom Report, who told NewsMax in mid-September that, though the gold price has risen to above $1,800 per ounce (at that time), it still remained grossly undervalued within the context of historical relationships with similar and other metrics used by Turk.
“In fact, I could make an analysis to show that the price of gold today is probably cheaper than when it was $300 per ounce based on the increase in government debt, based on the increase in monetary base in the United States and based on the expansion of wealth in Asia,” said Faber when ask of his opinion regarding the gold price.
Mr. Gold Jim Sinclair, 20-year veteran bond trader Paul Brodsky, Sprott Asset Mangement's Eric Sprott, prolific financial author Steven Leeb, and former Head of Princeton Economics Limited, Martin Armstrong, to name just several, all hold price targets of $10,000, or above, for the price of gold when the day that all fiat money finally squares itself with central bank reserve levels. Sounds preposterous?
Sinclair was laughed at by outsiders of the gold community in 1999 following his prediction of $1,650 for gold by 2010. Fewer pundits dare belittle him today for his $12,500 gold price forecast.
Especially after the gold price broke $1,000 per ounce in Mar. 2008, many pieces offering methods of value for an ounce of real money have littered the web, with all, save a few, calculating the long-term gold price to five-digits—at least! So far, Richard Russell won't budge from his call for $6,000 for the yellow metal. But more time is all the 50-year veteran of the markets may need to come around to the thinking of Turk and the gang.
A final note about the Goldmoney president, James Turk: it can safely be said that Turk is a cautious, conservative and measured communicator with with his wide audience. He neither gets too excited nor despondent during the volatile moves in the gold price.
Of all people, if James Turk can demonstrate a $11,000 value to gold and confidently make the call, that estimate could turn out to be a bare minimum appraisal. But from time to time, he'll be out with another adjustment to his target price as he's done on several occasion already during this bull market."[/b]
Impressed you read all of that. Now, do you want to laugh or cry?
Edited by AdvocatusD on Wednesday 26th October 12:02
Been following gold since 2008 and from what I can gather the outlook from most is very rosy. However saying that, I've just watched it go down over £100oz over the past few weeks!
From what I have learnt and on every article it states that gold goes up in episodes on uncertainty, therefore WTF is it going down!?? The nearer we get to what seems financial armageddon its been going off a slope.
That proves to me that really, I know nothing and the whole market is artificially manipulated.
From what I have learnt and on every article it states that gold goes up in episodes on uncertainty, therefore WTF is it going down!?? The nearer we get to what seems financial armageddon its been going off a slope.
That proves to me that really, I know nothing and the whole market is artificially manipulated.
It's going down because people remember that the last time it was riding high, in 1980, it then fell 70% in less than a year. Gold is v.volatile, hard to get rid of when the price falls, and is currently seen as less stable then the USD. At the moment, gold is tracking share prices, and nervous investors are piling into the dollar. Long term, who knows? Right now, it's a high-risk investment, unless you bought a little while ago, and are happy to risk some of your gain.
As much as I enjoy listening to James Turk, I am mindful that he runs GoldMoney, so isn't exactly free of bias when it comes to making these sort of calls. He may well be right, I have no idea, but he's very unlikely to ever say "I think it's going to go down and you're better off investing elsewhere", as that would put people off signing up with him. I post on a few other forums where gold (and silver) have long running threads, and people were getting absolutely slammed for voicing concern and telling people to be careful. The people doing the slamming are now the ones dismissing this as a blip, volatility or going all tinfoil hat and claiming everything is being manipulated. There's a great deal of groupthink going on.
I like gold, but I prefer silver.
Every time I have doubts about where gold or silver might go, I just think about where the dollar / pound / all paper currencies are going long term, then I feel better about it.
I'm really trying to ignore the ups and downs from week to week, as I really believe in 3 - 5 years time things will look very different.
Every time I have doubts about where gold or silver might go, I just think about where the dollar / pound / all paper currencies are going long term, then I feel better about it.
I'm really trying to ignore the ups and downs from week to week, as I really believe in 3 - 5 years time things will look very different.
FourWheelDrift said:
You're about 10 years too late, it's all been up since then. Which is when Gordon the Moron sold ours.
But that chart is not inflation adjusted. Between 1980 and late 2007, when people started to get a bit jumpy about bank solvency, you'd have been much better off investing in shares.http://online.wsj.com/article/BT-CO-20111025-71860...
I've been following this for a few months. I did a lot of reading about the safe-haven status, so was confused when gold appear to move along with the equities market (I'm new to this!).
However, it seems to be back on track again, as it's gone up (a lot) in response to economic uncertainity and in the opposite direction from equitites and commodities.
I've been following this for a few months. I did a lot of reading about the safe-haven status, so was confused when gold appear to move along with the equities market (I'm new to this!).
However, it seems to be back on track again, as it's gone up (a lot) in response to economic uncertainity and in the opposite direction from equitites and commodities.
AdvocatusD said:
http://online.wsj.com/article/BT-CO-20111025-71860...
I've been following this for a few months. I did a lot of reading about the safe-haven status, so was confused when gold appear to move along with the equities market (I'm new to this!).
However, it seems to be back on track again, as it's gone up (a lot) in response to economic uncertainity and in the opposite direction from equitites and commodities.
2 points to note:I've been following this for a few months. I did a lot of reading about the safe-haven status, so was confused when gold appear to move along with the equities market (I'm new to this!).
However, it seems to be back on track again, as it's gone up (a lot) in response to economic uncertainity and in the opposite direction from equitites and commodities.
1. it's Diwali - physical gold-buying season in India - prices always jump a little at ths time of year;
2. shares are also up.
Most of the experts warned of big volatility as the price went higher, and we had a massive correction a few weeks back.
Seems to be on a fairly steady upward path again now, back from $1600 ish to $1750 ish today.
I wonder if it will hit the $1900 again before the end of the year ?
Silver also back to $35 ish.
Seems to be on a fairly steady upward path again now, back from $1600 ish to $1750 ish today.
I wonder if it will hit the $1900 again before the end of the year ?
Silver also back to $35 ish.
Bluebarge said:
But that chart is not inflation adjusted. Between 1980 and late 2007, when people started to get a bit jumpy about bank solvency, you'd have been much better off investing in shares.
Say that again! are you mad! I started placing heavily into Gold in 2005 after reading a little book called "the coming Economic Collapse" was a bit doom and gloom and based on the oil price but a lot of it made sense. Had I stuck in shares, even adjusting for 50% inflation my investments in the yellow stuff has outstripped those shares by huge magnitudes. Please point me to one single stock portfolio option that would have given me a 350% return on my investment since 2005.Also worth noting that the premise of the book still remains, one of the largest drivers for Gold price increase is inflation. As the Oil/Gas gets scarcer the price of Gold will go out of the ballpark. We are already seeing our inflation figures almost totally driven by the increases in fuel prices. This may level out for a year or so but as demand goes up and reserves go down this is only going to get a lot worse..
chim said:
Say that again! are you mad! I started placing heavily into Gold in 2005 after reading a little book called "the coming Economic Collapse" was a bit doom and gloom and based on the oil price but a lot of it made sense. Had I stuck in shares, even adjusting for 50% inflation my investments in the yellow stuff has outstripped those shares by huge magnitudes. Please point me to one single stock portfolio option that would have given me a 350% return on my investment since 2005.
Also worth noting that the premise of the book still remains, one of the largest drivers for Gold price increase is inflation. As the Oil/Gas gets scarcer the price of Gold will go out of the ballpark. We are already seeing our inflation figures almost totally driven by the increases in fuel prices. This may level out for a year or so but as demand goes up and reserves go down this is only going to get a lot worse..
Are you saying gold rose by 350% between 2005 and 2007?Also worth noting that the premise of the book still remains, one of the largest drivers for Gold price increase is inflation. As the Oil/Gas gets scarcer the price of Gold will go out of the ballpark. We are already seeing our inflation figures almost totally driven by the increases in fuel prices. This may level out for a year or so but as demand goes up and reserves go down this is only going to get a lot worse..
What about the 25 years between 1980 and 2005 - would gold have been a better investment than shares over that period?
I bought gold at the end of 2007, sold earlier this year for a tidy profit (120% up)but really can't see gold climbing much further. If it can't hold above $1800 per oz in a Euro crisis, what will cause it to climb further?
I think you may be allowing your love for the shiny stuff to cloud your judgement. Some professional commentators (not people flogging gold investment websites) are predicting gold to drop back to $1350 next year.
Gold can be a good investment, but I'm not sure that it is now.
Bluebarge said:
If it can't hold above $1800 per oz in a Euro crisis, what will cause it to climb further?
I think you may be allowing your love for the shiny stuff to cloud your judgement. Some professional commentators (not people flogging gold investment websites) are predicting gold to drop back to $1350 next year.
Gold can be a good investment, but I'm not sure that it is now.
On the first point, the US still has massive debts problems, and I think worries about the dollar are more than enough to keep gold in the spotlight. That's not to say the euro isn't a factor, but I don't think it's the main one in all honesty. Also, it's not THAT long ago that people were saying it would never hold above $1000. I agree that there are a lot of experts with vested interests and it is very hard to know who to pay attention to, but that cuts both ways. Did any of those now predicting a fall predict the rise to the current prices? Not saying they're wrong, but if their predictive capabilities have been off up to now, why should they suddenly be right now? Fascinating subject either way.I think you may be allowing your love for the shiny stuff to cloud your judgement. Some professional commentators (not people flogging gold investment websites) are predicting gold to drop back to $1350 next year.
Gold can be a good investment, but I'm not sure that it is now.
hornet said:
On the first point, the US still has massive debts problems, and I think worries about the dollar are more than enough to keep gold in the spotlight. That's not to say the euro isn't a factor, but I don't think it's the main one in all honesty. Also, it's not THAT long ago that people were saying it would never hold above $1000. I agree that there are a lot of experts with vested interests and it is very hard to know who to pay attention to, but that cuts both ways. Did any of those now predicting a fall predict the rise to the current prices? Not saying they're wrong, but if their predictive capabilities have been off up to now, why should they suddenly be right now? Fascinating subject either way.
Yes they did (predict the current rise) - up to $1750 in November (due to Euro crisis) back to $1350 next year. Who knows whether they are right about the longer-term prediction? All I know is that gold can fall hard and fast once a crisis blows over and, if you're holding physical gold, it can be hard to find a buyer when that happens. That's why I'm oot for now.Rally to record by march? http://www.bloomberg.com/news/2011-11-01/top-gold-...
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