Sports

Welcome to the “$ 1,000 gold” fan club

The $ 1,000 gold fan club? Absolutely. And when it comes to fan clubs, its membership grows daily. There’s no question that the number of financial analysts seeing gold break the $ 1,000 mark has suddenly become as common as Tom Brady’s touchdown passes. But whether these folks are newcomers to the gold train or have been traveling confidently for years, it’s remarkable how many analysts now see nothing but good for gold.

This, for example, is what some $ 1,000 gold forecasters have to say …

o The falling Dow / Gold ratio. The Dow / Gold ratio, the number of ounces of gold it takes to buy a stock in the Dow Jones Index, has fallen from 42 in 2000 to almost 19 in 2007. “Which is interesting,” said analyst Dr. Marc Farber. , “is that despite the rebound in the stock market since October 2002, the Dow / Gold ratio has continued to decline. In short, for the holder of gold, the only honest currency in the world, since it cannot be printed by A rogue central banker, the Dow, while rising in value in dollar terms, has continued to decline in gold terms with the result that today it takes ‘only’ 20 ounces of gold to buy a Dow Jones Industrial Average.

“Simply put, since 2000, gold has risen at a much faster rate than the Dow Jones and I would expect this superior performance to continue for the next few years until ‘gold coin’ holders can buy a Dow Jones with just an ounce of gold.

“Now you may think I have gone crazy (but) I am convinced that the monetary policies of the US Fed will lead to a wealth inequality that will expand exponentially and will impoverish the majority of US households and the collapse of the capitalist system.
“However, if you consider that in 1932 and 1980 you could buy a Dow Jones Industrial Average with just one ounce of gold, then maybe my views are quite conservative. Possibly one can buy, at some point in the future. , a Dow Jones with only half an ounce of gold. “

With this in mind, Farber believes that we could expect much more than just $ 1,000 of gold.

o In 1980 dollars, gold is only half the price. John Hathaway, managing director of Tocqueville Asset Management, believes that $ 1,000 gold is not far off. “I don’t think it takes much. Let’s not forget that, in 1980 dollars, gold is less than half its current nominal price.”

“The disparity between the amount of paper that has been created since 1980 and the amount of gold that has been produced since then is simply huge. The ratio of financial assets to physical gold is at the lower end of a historical range. market that has ever been mined, which is a very conservative approach, and then taking the valuation of all the world stock markets and all the world bond markets, gold accounts for about 3%, compared to a figure in the middle 1920’s% range in 1980, which was the top of the bull market in gold and the beginning of the bull market in financial assets.

“Gold is definitely a good value at these prices, based only on the considerations we’ve discussed. Even if you don’t think worst-case results are on the cards, gold is still rare and hard to find. , and believe. For me, these companies are going through difficult times trying to maintain production, much less build it. “

o Central banks relinquish control of gold. Two Citigroup metals analysts wrote that central banks faced a choice between a global recession and their continued “control” of gold.

They decided to focus on avoiding the global recession.

“We believe that the political resolution of the credit crisis will take the form of a massive and extended ‘reflationary bailout’ in a new cycle of global credit creation and competitive currency devaluation that could drive gold to $ 1,000 / oz or more.” .

o Slashing interest rates will only increase the fire. Analyst John Ing believes that $ 1,000 gold is on the horizon. Your reasoning? Bankers are out of bullets when it comes to solving America’s debt battles.

“Ironically, while there is a crisis of confidence in the credit markets, the world is flooded with liquidity due to the huge current account surpluses of China and other Asian countries, as well as the Middle East,” wrote Ing. “However, the problem is not the supply of surpluses, but the imbalance between the short-term and long-term obligations of the world’s largest debtor and the United States. “

“As long as there is a lack of confidence in the short term, central banks are faced with the dilemma of how to supply liquidity. Today, central banks continue to boost the money supply, but money aggregates were already growing at double-digit levels and had little. room to maneuver. What is likely then is a drastic reduction in interest rates, which will serve as a palliative in the short term. But this will not correct imbalances. Central banks have tried to stabilize the global financial system by pumping out large amounts of money. liquidity in the markets. To date, they have only addressed the symptoms of the underlying crisis. The situation will get even worse. “

or “Gold is the purist game against the dollar.” When Citigroup’s former head of technical research predicts gold is heading not $ 1,000, but $ 3,000, it makes perfect sense to pay attention.

“Gold is the purest game against the dollar,” said Louise Yamada, managing director of Yamada Technical Research Advisors. She predicted that gold would top $ 730 on its way to $ 3,000 within a decade.

or “Still cheap compared to oil or base metals.” From Australia Fat Prophets Newsletter is another prominent member of the $ 1,000 gold fan club.

“We think the price could hit $ 850 an ounce by the end of the year, based on the problems in the US housing market,” says senior equity analyst Greg Canavan. “US housing was an accident waiting to happen. We have also been forecasting an eventual price of $ 1,000, and we would expect it in the first half of 2008.

“In the United States, we expect more interest rate cuts. In Europe, the euro is strengthening, with implications for exports. It could lead to a slowdown there,” he continued. “Also in Europe, the Bank of England had said that it would not be bailing out the lenders. But now it has been told that it must. So investors are seeing that gold is a fundamental store of wealth.”

Canavan added: “You should have 10 percent of your portfolio in bullion or gold stocks. Plus, it’s considerably undervalued right now, so it’s more than just insurance. Despite being at highs of over 20 years, it’s still cheap relative to oil or base metals. “

o World currencies “are getting more and more dubious.” James turk in his Free Market Gold and Money Report believes that $ 1,500 gold is possible.

“It is increasingly likely that there will be an explosion in gold once it clears the $ 1,000. Think about this for a moment. The US dollar is now trading at record lows, with no bottom in sight. Commodity prices are skyrocketing, with wheat at more than $ 9 a bushel and crude oil increasingly well supported above $ 80 a barrel. Gold is rising against all world currencies, indicating that the National fiat currencies backed by nothing but promises from over-indebted governments are increasingly dubious.The biggest bank run since the 1930s. … We must be mentally prepared for the possibility of gold surpassing $ 1,000 in the next few months , and then keep going up to a maximum.

“How high? A doubling of the price of gold has happened before in bursts like the one I’m describing, so $ 1,500 or more is not out of the question.”

So … where are you with your investments? Are you getting too hooked on those worrisome “paper” investments at a time when more and more people want to get their hands on something of authentic value? If that’s the case, and even if you’ve never joined a fan club in your entire life, today may be the perfect time to become a member of the $ 1,000 gold fan club.

Leave a Reply

Your email address will not be published. Required fields are marked *