Predicting the Future Gold Price Misses the Point

Jason Kaspar
Activist Post

“Gold bugs” routinely solicit my prediction regarding the future gold price, assuming I must be an “educated” gold bug since my hedge fund happens to maintain large gold exposure.

I loathe the question, because a typical gold bug will not “hear” my response, instead waiting for me to validate their speculative fantasies with the prospect of dollar signs and five-figure gold. Will gold rise to $2000/oz? $10,000/oz?

Where is the gold price headed?  It depends on the variable.

-In what time period? The next week? Month? Year? Ten years? 
-Compared to what? Dollars? Euros? Real estate? Gummi bears?

Of course, nearly everyone wants a prediction in dollars, which is highly humorous and paradoxical because the purported destruction of the dollar is a primary reason to own gold in the first place. What victory is there if the dollar value declines 50% and the gold price doubles?

Warning Signs of a Coming Currency Crisis

Dees Illustration

Greg Hunter
USA Watchdog

Gold hit an all-time high this week—again.  The yellow metal briefly topped $1,500 an ounce before falling back down a few dollars.  The world has become increasing nervous about the size of the growing U.S. debt.  Just this week, America’s debt topped $14.3 trillion (also an all-time high) which is close to the limit Congress can legally borrow. A recent CNSNews.com report shows why the $38 billion, that was just cut, is a drop in the budgetary bucket.  The report said,“Friday’s $34.54-billion jump in the national debt almost equaled the $38.5 billion the Republican House leadership said would be cut from spending for the remainder of this fiscal year by the continuing resolution that the Congress passed on Thursday and President Obama signed Friday.  The federal government is now perilously close to hitting its legal limit on debt.”  (Click here for the complete CNSNews.com story.) Odds are the debt ceiling will be raised by more than $1 trillion.  Meanwhile, the Fed is printing more than $75 billion a month to finance 70% of the U.S. budget.  The math of this screams currency crisis 2011!

Even key members of the Fed are openly worried about America’s sea of red ink.  A few weeks ago, Dallas Federal Reserve Bank President Richard Fisher said, “If we continue down on the path on which the fiscal authorities put us, we will become insolvent, the question is when . . . I look at this as a tipping point.” (Click here to read the complete story from CNBC.) Mr. Fisher said we are just at the beginning of correcting our budget problems and “it’s going to be very painful.” What do you bet “painful” will mean forced budget cuts and high inflation.

Read Full Article 

Enter your email address to subscribe to our newsletter:


Delivered by FeedBurner

Will the gold price go higher?

The price of gold has risen 27% this year and gold funds have returned up to 90%.

Richard Evans
Telegraph

Gold has had an incredible year. The price on the last trading day of 2009 stood at $1,085 an ounce; it has since risen to about $1,380, a rise of 27pc.

It has been higher still: the gold price struck its highest ever level of $1,421 on November 9.

There doesn't seem to be much doubt about the cause of this bull market. All the analysts we spoke to agreed that "quantitative easing" – or printing money – by central banks had sparked fears over the value of paper currencies, spurring investors to switch to more tangible assets.


By acting as a trusted store of value in times of uncertainty, gold was reverting to its ancient role. In particular, investors were using it as a hedge against inflation.

"Gold's rise this year has been driven by the big events in the global economy," said Daniel Brebner of Deutsche Bank, who has had a successful year when it comes to predicting the gold price. "The first and second bouts of quantitative easing by America's Federal Reserve changed investors' perception of the value of the dollar and their expectations about inflation."

He pointed out that, while the Fed's actions had attracted the most attention, other central banks had worked to loosen monetary policy, encouraging inflation. "The European Central Bank has provided a trillion dollars of funding, while China has been boosting its money supply," said Mr Brebner.

"All these actions have the same effect: they reduce faith in the value of money."

Read Full Article

Buy 1 Get 2 Free at Botanic Choice Buy 1 Bottle and Get 2 FREE (select items), plus Free Shipping on $25+ Expires 12/31/2010

Fresh food that lasts from eFoods Direct (Ad)

Live Superfoods It is time to Wake Up! You too, can join the "Global Political Awakening"!

Print this page