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Ardent Listener
Administrator
USA
4841 Posts |
 Posted - 05/03/2010 : 17:51:54
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$800 Gold Prediction. No, A Zero Is NOT Missing.
By Jon Nadler
May 3 2010 9:10AM
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Good Morning,
Sunday night’s initial price trend in precious metals was one of modest declines. The US dollar remained above the 82-mark on the trade-weighted index, while the euro did not immediately benefit from the announcement that Greece’s debt had been granted the reprieve that we alluded to in Friday’s closing lines. In fact, the common currency fell from a one-week high against the greenback after fears arose that the package may be insufficient to solve the contagion problem and that it will also bring about economic contraction (at least in Greece).
In an effort to stimulate apparently less-than-interested (at these prices) gold coin buyers, India Post is offering a 6% discount to would-be purchasers, good through the end of the month. In a joint effort with the World Gold Council, the country’s postal service is making 1,5, and 8 gram pure gold coins available through local head offices in various Indian provinces. It remains to be seen how much foot traffic the discount will engender.
Meanwhile, Indian’s jewellery buyers in India steered clear of their local bazaar over the weekend following gold’s momentum and fund-driven price spike to five-month highs on Friday. As the yellow metal remained above the 17,000 rupee (per 10 gr.) level, locals crossed their arms despite approaching auspicious gold buying days on the calendar, preferring to hold out for price corrections.
Speaking of price corrections, at least possible future ones, Michael Crook, VP & Strategist at Barclays Wealth (the UK’s largest money manager with nearly a quarter-trillion in assets under management) made a stunning (for some) prediction on TheStreet.com that aired yesterday. Warning: not for the squeamish.
Mr. Crook argued that once the current crisis is over and gold starts to reflect its ‘fair, adjusted for monetary policy (post liquidity extraction) price.’ That price is about $800 per ounce in Mr. Crooks’ opinion. Yes, not the $7,000 per ounce price TheStreet.com was offered last week by one of its rip-roaringly perma-bullish guests. Mr. Crook is thus shorting the GLD. Period. Buying Jan. 2012 puts, to be precise. He also sees platinum and palladium (bullion and ETFs) as the ‘winners for the next decade.’
May’s first trading session brought further gains to the precious metals complex, while gold in particular touched new records in sterling and euro terms on the back of continuing euro-wary bids it received in early trading. New York spot gold started the day with a $2.20 gain at $1181.50 the ounce (fresh, five-month highs) as the Friday momentum continued to exhibit remaining energy.
London markets were shuttered for a holiday (you know, that socialist one, all about workers) this morning, albeit the weather did not seem to cooperate with those who got the day off. There is little standing between the $1185 resistance area and the magic $1200 round figure (or perhaps the EW target for this overshoot, currently computed for near the $1210 level). After that, the questions are pretty much wide open as to what comes next.
Silver gained 4 cents on the open, rising to the $18.68 level. However platinum and palladium fell a tad with profit-takers afoot on the floor. Platinum gave up $2 to open at $1737.00 while palladium dropped $4 to start at the $545.00 figure per troy ounce. The dollar/euro pair was still tilting in the greenback’s favour this morning (USD index at 82.15 up 0.26 and the euro at 1.324) while black gold drifted 16 cents higher to the $86.31 per barrel indication. The economic calendar this morning will be looking for number on personal income and spending and the ISM’s Manufacturing Index. Dow futures pointed higher early on.
Well, Greece and China dominated the weekend’s news on the economic and market fronts. Several photo-op quality handshakes sealed the 110 billion euro rescue package’s approval on Sunday. After weeks of intense deliberations and bitter wrangling, replete with a long string of false starts and dashed hopes, the EU’s ministers finally came to an agreement on that which needed to be done in order to avert a default by Greece and a potentially lethal blow to the common currency.
That said, nobody (at least in Greece) has any illusions that this is a magic Band-Aid for the situation. To wit, Greece has to acquiesce to a truly…Spartan existence as it swallows the bitter pill of austerity imposed by its saviours. Some 13 percent of its GDP’s worth of a bitter pill, no less. Local unions have already labeled the measures coming their way as ‘savage.’
The financial life support hookup will last for three years and although expectations are that Greece will be able to pull this off, there are also somber projections of the four percent expected shrinkage in the country’s economy attached to such hope. The markets at large now need to ascertain to what extent this ‘containment’ of the eurozone’s hitherto spreading debt contagion will be successful. A task for coming days and weeks, we say.
Over in China, the PBOC announced that bank reserve ratios will once again need to be hiked in order to avert the nascent property bubble and emergent inflation threat. While the regulators could avail themselves of ‘blunter’ tools (such as higher lending rates, for one) to contain these looming threats, their preference has been to jawbone and resort to these ‘softer’ instruments as part of their policy up to now.
Some analysts feel that such mild-mannered measures are doomed to fail and that swifter and more meaningful moves will have to take place later in the year. In any case, the local markets have already not taken kindly to the prospects of the stoppage of what –up to recently anyway- has been a very nice party indeed. The SGE index has already shed better than 12% in 2010 on account of said dislike of any potential tightening.
Whatever measure are taken or not, some Citigroup and other seasoned economists opine that China is already on a path towards a ‘boom, bubble, and bust’ scenario, with another two years to go while the bubble shapes into its final form, and three additional and painful years during which it will deflate. This writer feels that stages one and two are basically complete and that unless aggressive measures are put into motion during 2010, stage three could commence within the same timeframe. For once, we agree with Marc Faber on something; the GB&D’s publisher told Bloomberg last night that he expects “a Chinese crash” within the next 9 to 12 months.
Commodity players greeted this particular mix of weekend news with…mixed feelings. On the one hand, risk appetite was expected to gain strength (along with the euro) following the Greek rescue. On the other hand, the fear of a slowdown emanating from the country that is shortly expected to take the role of runner-up on the global economic scene (dethroning Japan) has many a speculator spooked when it comes to throwing money at the markets with wild abandon.
Happy Trading.
Jon Nadler
Senior Analyst
Kitco Bullion Dealers Montreal
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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
$800 Gold Prediction. No, A Zero Is NOT Missing.
By Jon Nadler
May 3 2010 9:10AM
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Think positive. |
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Nickelless
Administrator
USA
5580 Posts |
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 05/03/2010 : 18:38:03
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quote:
Originally posted by Nickelless
The flip side will be ZERO supply at that price, or sky-high premiums.
You just had to ruin my shopping trip fantasy, didn't you?.  |
Realcent.forumco.com disclosure. Please read.
All posts either by the members, moderators, and the administration of http://realcent.forumco.com are for your edification and amusement only. It is not the intent of realcent.forumco.com or its host to provide investment, medical, matrimonial, legal, security or tax advice and nothing posted here should be considered to be so. All rights reserved.
Think positive. |
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Nickelless
Administrator
USA
5580 Posts |
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L1011
Penny Collector Member
310 Posts |
Posted - 05/03/2010 : 19:09:35
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| Ho-Humm..... |
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Lemon Thrower
1000+ Penny Miser Member
USA
1588 Posts |
Posted - 05/04/2010 : 04:53:54
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| i saw that nadler wrote that article so i did not bother to read it. his track record has been atrocious. |
Buying:
Peace/Morgan G+ at $15.00
copper cents at 1.3X
wheat pennies at 3X
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wolvesdad
1000+ Penny Miser Member
USA
2164 Posts |
Posted - 05/04/2010 : 05:56:31
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He was not making the prediction. He was 'quoting' another who made it.
$800 at a ratio with silver of 40 to 1, = $20 an ounce silver.
I could see it.
I don't think gold will fall back to $800, but it is possible. |
"May your percentages ever increase!" |
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 05/04/2010 : 09:24:30
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So far today only gold seems to be holding.
GOLD 1,183.65 $ +1.35 +0.11%
SILVER 18.36 $ -0.41 -2.18%
WTI CRUDE 84.15 $ -2.04 -2.37%
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Realcent.forumco.com disclosure. Please read.
All posts either by the members, moderators, and the administration of http://realcent.forumco.com are for your edification and amusement only. It is not the intent of realcent.forumco.com or its host to provide investment, medical, matrimonial, legal, security or tax advice and nothing posted here should be considered to be so. All rights reserved.
Think positive. |
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Investin Cents
Penny Pincher Member
USA
129 Posts |
Posted - 05/04/2010 : 10:11:55
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| I would welcome $800 gold, regardless of premium or supply concerns. There will "always" be sellers at any price. My last major Gold buy was at $800/oz so I'd load up more at that level. Gold's price, like the Stock Market's recent run-up seems a bit premature & lofty given the present situations, though for different reasons of course. |
Most recent book I've read: "Meltdown" by Thomas E. Woods Jr. Current book: "I.O.U.: Why Everyone Owes Everyone & No One Can Pay" by John Lanchester |
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Lemon Thrower
1000+ Penny Miser Member
USA
1588 Posts |
Posted - 05/04/2010 : 10:23:14
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paul van eden comes up with a number of around 850 based on money supply. but he uses a narrow definition that excludes excess reserves of banks held at the fed. if you count those, the money supply is double. those will eventually be released so one should count them.
also, focussing on the money supply presumes the money is valid. the us has turned into a banana republic. if you count everthing that is off balance sheet, like social security and fannie and freddie guarantees, the numbers are staggering, far worse than Greece. on a gaap basis, the annual shortfal is is 4-5 trillion each and every year. this is per john williams at shadowstats. |
Buying:
Peace/Morgan G+ at $15.00
copper cents at 1.3X
wheat pennies at 3X
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 05/04/2010 : 18:56:07
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quote:
Originally posted by Nickelless
quote:
Originally posted by Ardent Listener
[quote]Originally posted by Nickelless
The flip side will be ZERO supply at that price, or sky-high premiums.
You just had to ruin my shopping trip fantasy, didn't you?.
[/quote]...as I sit here waiting for the usual May dip in silver.[:P]
Your wait is over my friend.  |
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All posts either by the members, moderators, and the administration of http://realcent.forumco.com are for your edification and amusement only. It is not the intent of realcent.forumco.com or its host to provide investment, medical, matrimonial, legal, security or tax advice and nothing posted here should be considered to be so. All rights reserved.
Think positive. |
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beauanderos
1000+ Penny Miser Member
USA
2408 Posts |
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beauanderos
1000+ Penny Miser Member
USA
2408 Posts |
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jonflyfish
Penny Hoarding Member
USA
693 Posts |
Posted - 05/04/2010 : 23:00:26
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| For every $800 prediction there is one for $8000. See no problem with both coming true. A lot easier to hit a target a few hundred away than thousands. Meanwhile $1400 will hit sometime this year and $2000 before the end of next year. Gold is becoming a safe haven all over again and will accelerate. Some say gold is an inflation hedge. You can find data that abstractly supports that. Some say it is not. You can find data that abstractly supports that. Some say gold is a hedge against government. You can find data that supports that. Some say it is not. They CANNOT support that. |
The first panacea for a mismanaged nation is inflation of the currency; second is war. Both bring a temporary (and false) prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunities. |
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$800 Gold Prediction.
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