In the long run developments in the financial markets and around the world seem to conspire to whip up a perfect storm for the gold price, taking it up towards $2,000 and further. That new upleg, however, could very well start from a much lower level than now. There are quite a few developments that could easily send the gold price lower in the coming months. Is $1,200 gold in the cards? Words: 739
So wrote Edin Mujagic (http://www.ecrresearch.com/) back in March of this year in an article* which warants being reposted as what he predicted might very well be occurring at this very point in time.
Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has further edited ([ ]), abridged (…) and reformatted his article below, where necessary, for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.
Mujagic went on to say:
Is a Tighter Monetary Policy Coming?
Although the Fed Board is at odds now whether or not to tighten monetary policy, it is quite conceivable that the Fed will be forced to follow that route when inflation keeps climbing. Keeping the monetary policy at the current ultra-loose stance with inflation increasing much further would risk an outright dollar crisis with inflation getting out of control and much higher long term interest rates, which in turn would push the US government towards bankruptcy…
Will We Have a Near-term Buying Opportunity?[The above] factors are gold-negative [and,] combined with the fall in stock prices that we expect as well, could send the gold price significantly lower – temporarily. [That being said, such an outcome] would present a nice buying opportunity as gold is destined to reach new highs in the years to come. Note that the current price (corrected for inflation) is not the highest price it ever soared to. In nominal terms this will only be the case if gold hits $2,200.
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7 Reasons Why Gold is Destined to Achieve New Highs
- Emerging countries like China, Russia, and India have been buying a lot of gold for quite some time (via central banks and sovereign investment funds). The reason is that they wish to diversify their currency reserves and prepare for a future dollar crisis triggered by high and rising indebtedness in the US and the Fed’s very loose monetary policy.
- After three decades of low and easing inflation the trend may finally have reversed. Progressively more investors fear higher inflation or even the occasional bout of hyperinflation in the future.
- There are fears that the public finances in the West could eventually derail completely. If so, there will be even more political pressure on western central banks to monetize the budget deficits. Under such conditions gold is traditionally seen as an excellent hedge.
- Gold relishes a deteriorating geopolitical situation, which we expect in the coming years. If only because the rise of China means that this country will flex its economical, military, and political muscles on the global stage. This could soon lead to conflicts with the other star player, the US (for example about Taiwan).
- Unrest in the Arab region (and elsewhere) may well be a harbinger of things to come. Not necessarily because of an immediate escalation (should the latter take place gold will undoubtedly soar further). Following the turmoil new regimes will take power, often after long periods of dictatorship. There is no telling how stable those governments will turn out to be – or how democratic. This carries the risk of new and violent turbulence… In response, the price is bound to soar up and away.
- A dollar crisis at some future stage cannot be ruled out whereas the other major global currency (the euro) is fighting for its very survival. Uncertainty on the foreign-exchange markets is good news for gold.
- As demand rises – which is highly likely – what about supply?…These days, new gold supplies are a rarity. It is possible to extract gold from unorthodox sources such as seawater but these techniques are expensive and will only be applied once the gold price has become a lot higher.)
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[Yes, gold could well drop to as low as $1,200 – short term – but,] on the wings of the above developments, gold is destined to reach record heights in the long run.
Why have gold and silver have been selling off? The answer is very simple. There is a strong correlation between a strong dollar and weak commodities. The dollar is no different than anything on earth – it will always follow the path of least resistance. As the dollar grows stronger commodities sell off or become cheaper [- and gold could go down as low as $1,500/ozt. and silver down to perhaps as low as $21/ozt. before this is all over. Let me explain further.] Words: 650
What’s going on? If gold is the great anti-asset, the thing to hold when everything else is in collapse why is it now trading…[below $1,700 and] not $2,000? Words:1147
Goldrunner: a Gold & Silver Tsunami is Approaching – Fast! A tsunami doesn’t start with a bang, but with a whimper. The first sign is a little hump in the water way out in the distance that is barely notable. Anyone who catches a glimpse of it simply continues to expect the day to be the same as the last many days – calm and beautiful waters along the shore. This is the point where we are, today in the Precious Metals sector. Many have seen the little roll of water out in the distance as Gold edged up in the first move of a more parabolic slope, yet most investors are mired in the same expectations of yesterday – a return for Gold to correct down into a lower base. Our analysis based on the fractal relationship to 1979 shows, however, that the mid 900s are a realistic target for the HUI by the end of the year or early in 2012; that $52 to $56 should be achievable for silver, with $58 to $62 as real possibilities; and that Gold should go the $2250 level followed by $2500 with the potential for $3,000, or a bit higher, now on the radar screen. Let me explain why that is the case. Words: 2130
155 analysts have gone public, to date, in maintaining that gold will eventually go to a parabolic peak price of at least $2,500/ozt.+ before the bubble bursts. Of those 155 a total of 140 believe gold will reach at least $3,000/ozt., 101 see gold achieving a price of at least $5,000/ozt. and 20 maintain that gold will reach a parabolic peak price of $10,000 per troy ounce or more. Take a look here at who is projecting what, by when and why. Words: 832
A review of the gold price written by Robin Bew, chief economist at HSBC Bank, proposes that the gold price isin danger of entering bubble territory and predicts a sharp correction by year-end to $1,000 per troy ounce by 2013. [Let’s examine Bew’s views more closely.] Words: 725
When you just consider the downgrade of U.S. debt, the jobs problem, the housing situation, the European bankconcerns and their debt crisis, the negative outlook for the global economy, not to mention that the Fed will likely seek new measures to help the economy, we just don’t see gold coming down any time soon, other than having a normal downward correction [as currently is the case. Let us show you why.] Words: 1102
Why is gold falling as the financial crisis worsens? After all, isn’t gold some sort of safe haven? [Let me explain.] Words: 605
Following the crowd has never been the reason to buy gold. After all, that same logic would have recommended buying a house in Phoenix five years ago. Since the fundamentals still point to gold’s long-term viability… why are investors responding by selling gold and buying dollars and euros? I was always told not to look a gift horse in the mouth… so take advantage of the dip. Words: 880