Which comes first gold at $1500 or $3000?

"... Commodity expert John Stephenson from First Asset Investment Management ... {was asked} is gold in a bubble?

Absolutely not. In fact, I think what you're going to see is gold hitting $3,000 an ounce way before you ever see it dipping below $1,500 an ounce. So I think the best days are yet to come for gold investors. ..."

from: http://www.moneyshow.com/investing/article/43/VideoTrans-25448/Why-Gold-Isnt-in-a-Bubble/

Which will come first? What's your view?

Perhaps this thread can replace the old obsolete poll thread on gold prices. (or use the old if you prefer.)

 

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I'm having trouble pegging it at what it should be is u.s stayed on gold standard.

Maybe 2500? So a pendulum swinging to 3000 does makes sense before it settles to it's proper value.

 

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so it's dipped a bit - might go low 1600s...banks selling off again?

 

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This is a really hard call because who knows what the central banks are going to do. They're certainly not going to give up their power. I suppose one question is, what happens to gold if we enter deflation and high interest rates?

 

The value of dollars seems to steadily increase.
Inflation will probably fall rather than rise.
Why use dollars to buy gold at a risky price?

 

On (1) that is somewhat true if compared to the Euro but not if compared to currencies of growing economies like Brazil and China.

I don't have the decrease of dollar value wrt to the RMB (Yuan) but for Brazil: About 9 years ago I sold dollars and got more than 4 Real for each. If I did that today, I would get only 1.8R$ I.e. wrt to dollar the Real's value has increased by ~250% in less than a decade. This fact alone has made my Brazilian stocks and ADRs more than double in dollar terms.

One which I have recommended in old posts (an ADR with symbol SBS*) I bought back then for less than 7$ /share & some for less than 5$ /sh, is now now occasionally trading above 50 dollars per share. (I own now more than $100,000 worth of SBS.) I bought Bunge, which was then a Brazilian company; it is not doing as well as currently has problems with the government of Argentina, so is up only 7 fold. Most are up in dollars only by factor of 3, as current crisis has pulled funds out of the Brazilian stock market. - The "flight to safety" nonsense. - Which IMHO is much like a horse running back to the "safety" of its stall in burning barn.

From 29 Aug2007, at http://www.sciforums.com/showpost.php?p=1522170&postcount=77 but did not easily find the earlier one tell SBS specifically


On (2): Reply to (1) and QEx printing presses plus disfunctional government makes that false.

On (3): Because value of dollar is dropping and that of gold is rising over most any three year period in the last decade (I guess without checking). I suspect that gold may cost less at end of 2011 than it did at the start as some gold will be sold by central banks of hard pressed Euro countries - another way to kick the "default can" down the road, until the vault is empty. And like all the other "can kicking tricks", (now being used extensively by the US) just makes the problem worse eventually.

-----* SBS is the water and sewer company of Sao Paulo city and state - still adding customers as many still have toilets that dump into the local creek and use wells or springs. (The farm I owned did both.**) It still pays a very generous dividend - more than 4% as I recall.

**When I bought it the "drinking water" came from a creek the cows walk thru. I had my hired man close cut the weeds on the side of a near to house hill. There I found a moist spot. Digging less than a meter down there thru some clay we found about an inch in diameter "natural water pipe" with more water than I could ever use flowing thru it. 150meters (three rolls) of hose delivered very pure H2O to my farm house with an inverted T at the junction with the natural pipe to let the excess escape to the surface, thus preventing the natural pipe from becoming clogged.

I did make a septic tank for the smaller house which son of my hired man lived in (preventing my larger house from being robbed) as I only went to farm, at most, two week-ends per month. When I sold farm 10 years later, at a very nice profit, my toilet still dumped into the creek. I built his septic tank with a tiny tube sticking up to vent the CH4 CO2 mix but could not keep it burning. House he used was next to the road at farm's gate - I had hoped to encourage others to build septic tanks with an ever burning fire.

 

Well, I didn't make $100,000 from my opinion.
I'll grant you that argument.

 

“… Press TV: The big news coming from China in the past few weeks is that investment demand for gold and silver is up. Give us the numbers.

Collins: Yeah, real big news, Max. Shanghai Gold Exchange reported last week, starting with silver, silver demand's up 750 percent for silver forward contracts. The major buyers here are the large commercial banks of China.

First of all, I'll talk a little bit about silver. They're following the gold pattern here in China which is average Chinese citizens here now can buy silver in their bank account. So, you don't need to keep cash in your bank, you can go online and move your cash into silver or you can move it into gold. And that's really what's driving the increase in gold and silver prices here.

They started the gold trade in the major commercial banks about three years ago. Silver started last year in August, 2010. But what was really shocking is the numbers that have come out. I mentioned the year over year increases.

But if we look at just one Chinese bank, the ICBC, Industrial and Commercial Bank of China, first half of this year they sold over 300 tons of silver. 300 tons is roughly about 10 million ounces. So, this year they'll do roughly 20 million ounces of silver which is roughly 2 percent of all the silver mined in one year.

So, we look at the Chinese banking system just starting these new products in China, this year they could take nine or ten percent of all the silver mined in the world. And these products are just getting started. Two, three, four years from now, the Chinese banks could be selling {o increasingly rich Chinese} 20, 30, 40 percent of all the silver mined globally. And that's really why we're seeing huge increases in silver.

Press TV: I got to tell you, Dan, these are blockbuster numbers. And the banks are effectively allowing Chinese people to have bank accounts that are based in precious metals. {BT notes: too bad US will not do that - may even confiscate your gold again. US can't - it needs to devalue the dollar, yours included, to pay its debts.}

I know Eric Sprott in Canada is trying to introduce a new banking facility that would give people in Canada a similar option to have their reserves or savings held in bullion. But, apparently, the Chinese are beating Eric Sprott to the punch. That's what it sounds like.

Effectively, it's becoming a bi-metal reserve currency in China, is that right?

Collins: Absolutely. It's a really innovative product and you wonder why Western banks -- that are tough to make money - haven't thought of this earlier?

Gold trading has been very successful in China. The penetration, though, in China has been very small. Probably, I would say, less than 5 percent of the people keep gold or silver in accounts. But it's growing rapidly every year in the hundreds of percentile, the new people coming in, opening gold accounts and silver accounts.

Press TV: Right. And in the case of silver, as you mentioned, two percent of the silver coming out of the mines are going into the savings accounts. That's a very big number. Plus you've got increased demand for silver in solar energy. You've got it in electronics, of course. And there's only about a billion ounces of silver above ground. Unlike gold, of course, silver is used industrially.

So, there's not very much silver out there. The price on silver, of course, with that kind of demand would have to rocket over the many hundreds of dollars per ounce level that we're looking for over the next few years.

Now, I see that you were reporting that a family of fund managers has been sentenced to death after defrauding investors of a billion dollars. Dan Collins, tell us more about this. I like the sound of this.

Collins: Basically, Hangzhou, a city here from about two hours away from where I'm at, a very Madoff-type scenario - a typical ponzi scheme - they paid off the old investors with the new money. Long story short, they lost about one billion US dollars, defrauded around 15,000 investors. But it only consisted of a father and two sons, at this fund.

The only difference between these guys and [Bernie] Madoff is that they were quickly all sentenced to death.

From: http://www.presstv.ir/detail/211132.html go there and they will read it to you (while you do other things on your computer.)

Billy T comments:The article is much longer and includes suggestion quite like I made a few years ago*: – i.e. the as world’s largest gold producer and major buyer, China could back it bonds (for central banks only) with gold effective making the RMB there prefer international reserve currency.

from slightly more than one year ago at: http://www.sciforums.com/showpost.php?p=2643758&postcount=115
*

From: 11/11/09 at http://www.sciforums.com/showpost.php?p=2410918&postcount=925

 

In case you (or anyone) is interested here are my holding today at 2PM at TD AmT (I have smaller half million dollar account at C. Schwb too plus stocks in Brazil.):
Symbol #of shares Last price

ABAX 900 26.36
AG 1000 15.19
AGIXQ,600 0.0199 Bankrupt, but doesn't go away from list of what I own.* (I don't know how to sell it- I want to establish the tax loss.)
ALKS 100 15.04
BG 500 59.99
BVN 100 40.32
CBD 200 33.97
CBEH 400 0.46
CDE 200 27.47
CEU 666 1.33 (666sh as there was a 3 to 2 inverse split applied to my 1000 shares)
CIEC 500 1.00
DGW 200 3.88
DL 1800 2.54
ESV 100 50.03
EXEL 800 4.25
FBR 1000 7.37
FUQI 2560 1.70 (I was "bottom fishing" as I usually do with GTC order open. Still missing 40 sh at end of day and I canceled order to void paying commission the next day too.)
GFA 400 5.96 One of the few significant Brazilian losers. They got hurt by Brazil's prosperity - Stuck with many low cost houses they can't sell at a profit as now even the poor can afford better. I don't "cut my loses" as I should - I'm always hoping for a turn up in share price. I only take loses for tax reasons.
HL 1000 5.77
HOGS 1000 9.86
JST 200 8.1004
MR 100 25.09
NEM 200 66.66
NOV 200 65.01
NPD 400 2.32
NVS 100 53.67
OSKFF 1000,10.82
PAAS 1000 24.2799
PBEGF100 8.83
PMGLF 61 19.645 strange (for me volume) as was "free" spin off
PRX 200 29.49
RDY 100 29.48
REGN 600 56.25
RVM 800 4.69
SBS 3700 54.73
SCHP 6126 55.35
SLW 1500 32.45
SO 300 42.835
SPHRY10000,11.33
STO 200 24.78
TOT 200 49.01
UNP 200 98.89
VRTX 400 28.295
VZ 1500 36.15
ZSTN 400 2.41

* Ironically of all I own, I was most sure this would be a big winner when buying. I bought it within ten minutes of first learning it even existed. I was listening via internet to presentation of early stage drug companies, seeking funds. (They have expenses for years and not income.) The next speaker started with an apology - He could not give data he expected to have as not enough of the very serious heart cases his drug addressed had yet died to allow "unblinding" of the data. They needed about 15 % more to die before study would be unblinded. I knew only half of the trail were even getting the drug - and thought I should buy before anyone else realized how great a break thru he just told, so I switched to my alway open broker's page and bought 600 shares. My fear at the time was some in his audience would beat my order with their cell phones and drive the price up.

It was, as best as I could tell later, a very effective drug, but the company had make half a dozen claims to the FDA. One was that it would reduce the need for expensive heart transplants - the group getting the drug lived longer and need more than twice a many! - I.e. got strong enough on the drug to under go the operation. Several other claims also failed but they lived much longer! The FDA followed it rules and did not let the drug go to market - required a new study which the company could not pay for - it went belly up and what may have been a good drug for very ill people no longer exists.

Some of my Chinese stock are way down from what I paid - too many frauds have hurt most of the small cap s I buy. Some will gain in dollars with the upward evaluation of the RMB, but I would have been better off if I had stuck with the rule I posted a few years ago: Buy BRICs but not Russia or China - they will confiscate your investments. Sometimes I think China did - but was clever about how, so no one can take them to any international court.

 

Here is more like post 8 from another source (both just tell what I forecast several years go -see links to my old posts in post 8):

" BY LARRY D. SPEARS, Contributing Writer, Money Morning
While many investors have been distracted by the goings on in Europe, China has been making a dent in the global gold market by making it easier for investors to buy and invest in the yellow metal.

The goal: To dominate the global gold market and carve out a new role for its currency, the yuan.

China and other developing nations like India have been encouraging citizens to buy and hold physical gold, in forms ranging from jewelry and coins to bullion bars. China's aggressive promotion has pushed Chinese consumer demand for gold up 25% overall this year - much higher than the 7% global average.

World Gold Council (WGC) Far East Managing Director Albert Cheng, who predicted in March 2010 that Chinese gold demand would double by 2020, noted: "We now believe this doubling may, in fact, be achieved far sooner."

China is pushing gold because it wants the government and citizens to build financial reserves in assets stronger than the U.S. dollar, euro, and other weakening currencies. It also increases China's role in the precious metals market.

But there's another effect of this push for gold ownership: it's dislodging the dollar as the world's main reserve currency. *

China's push for private gold ownership represents a major policy shift. Chinese citizens were barred from owning physical gold under penalty of imprisonment until 2002. Since that policy was dropped and the Shanghai Gold Exchange opened, China has steadily stepped up efforts to encourage precious metal ownership.

The government now airs news programs on state-owned China Central Television describing how easy it is to buy and sell gold and silver. ..."

From: http://moneymorning.com/2011/11/22/china-changing-global-gold-market/

Billy T comments:As I have repeatedly noted - there is a huge advantage to the issurer of the world's reserve currency - you can pay for real goods and service with printed paper. China wants as least a piece of that pie, and probably will get the whole pie in less than 15 years.
-----------
* I explained how China can easily do that about three years ago WHEN IT WANTS TO DESTROY THE DOLLAR. I.e. just use its position as world's largest producer of gold and a huge buyer of gold to back its bonds with gold. (I suggested 5000 Yuan to the oz) but ONLY for central banks. They will not very often ask for the gold as prefer interest paying bonds to costly to store gold, but will surely test the backing occasionally. Who would want US bonds, paying little interest and at maturity giving only a fraction of the purchasing power the bond were sold for? When China's bonds mature, the Yuan you get buys more than the Yuan you gave China years earlier to buy them. If I could, I would buy Yuan bonds, in a "NY minute" - even without being able to ask for gold at maturity. Except for some TIPs I own, I would not touch US bonds with a 15 foot pole.

 

Silver is either going to $500 an once and the Banking industry will be totally restructured possibly without central banks. OR the people are going to loose even more freedoms, accept their lot in life as debt slaves, get used to a new aristocracy and live like serfs like the fat bitches most of them are (hence the need for Mexican hard workers to pick our fruit).

So, which is it? Freedom or Slavery?

 

"... Venezuela has received its first shipment of gold bars, ... The gold was unloaded from a plane and taken under heavy guard to the Central Bank in the capital, Caracas. ... Hundreds of troops lined the route to Caracas as a convoy of armoured security trucks escorted by military vehicles carried the bullion to the bank.

President Chavez has explained the move as an act of sovereignty that will protect Venezuela's reserves from global economic turbulence. Venezuela plans to bring home around 160 tonnes of gold, worth more than $11bn (£7bn).

From: http://www.bbc.co.uk/news/world-latin-america-15900885

 

Never forget that people let Fiat money(money as debt) happen. Except for a few historically minded people paying attention , no one said shit. Money as shiny objects at least leaves you with a shiny object after they are done playing with your savings.

 

At least some think 1500 is first:

" NEW YORK (Reuters) - Gold prices will fall below $1,500 an ounce over the next three months and are unlikely to retest September's all-time highs until later 2012 at the earliest, according to a Reuters poll of 20 hedge fund managers, economists and traders.

The bleak forecast, coming after gold has lost 11 percent of its value so far this month, is likely to fuel fears that bullion is close to ending its more than decade long bull run and entering a bear market.

Almost half of respondents predicted bullion will fall to 1,450 an ounce in the first quarter next year, with three seeing prices as low as $1,400 an ounce.

The forecasts come after a dismal performance last week when prices hit a 2 1/2 month low of $1,560 and gold lost its safe haven status.

Selling was fuelled by a scramble by hedge funds for cash to meet client redemptions at the end of a difficult year and a run for cash by European banks seeking to raise capital. ..."

From: http://news.yahoo.com/gold-drop-q1-far-retesting-record-high-reuters-115936453.html

 

Maybe Gold is at about its right price now.
I don't think it will ever be a cheap commodity again.
The irony of it is that all the time the Gold buyers said that Gold was too cheap,
probably from 1980 onwards, they were right.
It took 30 years of looking as though they were wrong before they were proved right, but they were right despite it all.

The other thing is that if you look at charts, it was when we stopped tying the printing of money to Gold reserves
,that the value of money began to evaporate.

I did think that the rise of Gold over the last few years was a bubble,
but I am a late convert. It is the best hedge against inflation.
It will shift upwards in price now in line with inflation, as it always should have done had we not had this flight into false money.

 

The Dragon Year Gold Bar that was put on the market in late November is a star product whose demands exceed supply, with thousands having been preordered one year in advance.
Silver for the less well off.

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Many choices:

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Different patterns on the bars have different meanings. Gold bars with pattern of "Onward & Upward" and "Grand Prospect" make good gifts for business partners, and "Good luck and Happiness" and "Smooth Journey" for close friends, and some with "Blossoming Flowers" are designed specifically for females.
From: http://en.ce.cn/Insight/201112/26/t20111226_22949614.shtml

Note the third image no longer displays (China Daily will not up load after after a few days) but it showed pretty Chinese lady holding up a 1 Kg gold bar with designs on it too.

 

"... BEIJING - China should further diversify its foreign-exchange portfolio and make more gold purchases ..."The Chinese government should not only be cautious of the imported risk caused by rising global inflation, but also further optimize its foreign-exchange portfolio and purchase gold assets when the gold price shows a favorable fluctuation," said Zhang Jianhua, director of the research bureau affiliated with the People's Bank of China (PBOC). ...

Zhang said bleak economic conditions, increasing international liquidity as countries turned to monetary easing and the resulting high inflation had dampened investors' confidence. He said that gold had become the only "safe haven" for risk-averse investors. "No asset is safe now. The only choice to hedge risks is to hold hard currency - gold." Zhang didn't specify what proportion of China's $3.2 trillion foreign reserves should be held in gold. ..."

From: http://usa.chinadaily.com.cn/2011-12/27/content_14334601.htm

PS there some are reports that China stopped all buying of gold about 6 months ago - perhaps why gold price retreated. - Could it be China's plan to induce bear market in gold, and then buy more at lower prices?

 

I haven't looked in awhile, but gold is edging closer to $1500 and silver was near $25. One thing to consider: while the Chinese may want gold to hold wealth, they also want to control their cattle with fiat currency just as all rulers want - more power of people. TTYTT gold is probably a little too much freedom than the Chinese autocrats could stand.

TTYTT, I think China could be in for a world of hurt. They have bubbles all over the place. Too many factories. Too many empty cities. Chinese MDs on only $30K a year. AND cities require people to live in them, they're constantly crumbling. They need serious tender love and care by people who are used to living and taking care of city dwellings.

anyhow, no one knows the future, and while yes I agree this is probably the Asian century, but, I also expect some serious stumbling on the part of China. It's not going to be smooth sailing.

 

"... Metals Market Commentary by Jim Wyckoff:
February gold futures closed down $42.50 an ounce at $1,553.00 yesterday. Prices closed near the session low and hit a fresh three-month low yesterday in surprisingly active holiday trading. A strong U.S. dollar index, weak Euro and lower crude oil prices yesterday pressured gold. More serious near-term technical damage was inflicted. Prices are also in a seven-week-old downtrend. ..."
From: http://www.traderplanet.com/newsletter_articles/view/6485/distribution:7

 

Yes there is risk for the CCP especially with other things they are doing such as paying higher salaries - promoting a more domestic based economy, but they had no choice. The old economic model: keep population poorly paid and working long hours in sweet shops making cheap goods for export to US & EU is broken - The US and EU are broke - can only buy if China lends them the money.

Certainly there is a timing problem but China did not want to follow the rest of the world into the economic recession that started in late 2008, so recognizing that it needed a great increase in infrastructure built more than the immediate needs.

What you need to also understand is China is making by far the greatest urbanization in human history in less than a decade. Transforming itself from a nation of low productivity farmers to world leader in many fields (Everything from tiny vaccines and electronics to world's fastest trains and largest hydro-electric plants, etc.)

In less than a decade a population of former "pig farmers" AS LARGE AS THE ENTIRE US POPULATION will move into the new cities. I.e. China is building housing and jobs the equal to the US total in a decade. They wisely avoided the US's recession by pre-building some of what they will need and will escape the coming worst ever depression.