Can someone predict the price of gold

[goldnugget77]

This is a question that probably was asked before and it is impossible to answer
It preoccupies everyone's mind
But I will ask again at the risk of sounding stupid
Can someone predict the price of gold
Thanks

 

[daveerf]

Hi, predicting the price of gold is tough.

I can give you an observation of what I have read about gold for the past few years. Some of this is compiled opinions from gold experts and some of it is from my opinion from researching about gold.
Let's start with availability. Many different things I researched showed South Africa, Australia and many other major mines are dropping in output year after year just starting recently about ten years ago. You can read the charts online easily by searching google. Another article I read mentioned how in the 1970's when satellites were going up in space, the technology helped find more gold deposits and they stated that all the easy gold to find is gone now.
Another one of my observations is if you see some of South African mines, they are so deep that they have to expensively pump A/C in or the workers die from heat exhaustion. My contention is how much deeper can they go?
Another thing that will raise the price is more expensive machinery, more expensive environmental costs, more expensive labor, fuel and operating costs.
Now look at consumption. Many countries like China, India (which have exploded in population) as well as Russia, countries in Asia and South America that had many poor people living in mud huts or whatever, are now more wealthy and are purchasing gold jewelry and electronics which use gold. Industrial plants in these countries are exploding in growth, another user of precious metals. China will be building 200 new cities and that alone will use up a large amount of gold. Now there are 1 to 2 billion more people buying cars, computers, electronics, building homes and buying gold jewelry in China alone that used to grow rice and live a meager life.

Although on the other hand, we may stay in this recession for many years. Also, millions and millions of people bought gold ETF's (Exchange Traded Funds) and physical gold. A run on selling this accumulated gold will cause more than a modest drop. I've read opinions from hundreds if not thousands of individuals talking about buying gold and the dealers that said they were running out of gold and silver. For the first time in almost 20 years since its inception, the U.S. Mint halted the sale of gold coins.
In my opinion, millions of people hoarding gold and silver can affect the price with a panic sale, more than could an investment fund that invested in gold. The IMF also has plans to sell 403 tons of gold (if it's approved) over the next few years.

Someone turn me over, I'm starting to burn LOL
(I had to stop myself, I can easily post the longest message on this forum. I've been known to put animals asleep from excessive talking lmao)

 

[Anonymous]

Now there are 1 to 2 billion more people buying cars, computers, electronics, building homes and buying gold jewelry in China alone that used to grow rice and live a meager life.


I have been there, there are not that many peole there buying much of anything. Sad to say.

Jim

 

[Oz]

James in general you are correct as to “the people” of China, however the country not being a democracy has the ability to look forward and make plans long term without interruption short of an overthrow of their government such as the US with 4 year regime change by elections. China is doing many things to protect itself from the awkward position it is in holding so much US debt. They have close to doubled their Central Bank gold holdings in the last 5 years, entered into currency swaps with other countries so commerce can be conducted in Yuan not dollars, they are buying on long term contract almost all commodities using their US Treasury holdings as collateral (they can sacrifice collateral without hurting their other US Treasury holdings value by selling outright), and they are selling long term Treasuries (like the 30 year Treasuries they used to buy) and buying Treasuries that instead mature in under 1 year meaning the don't "have" to sell but just let them mature instead of roll over if they wish. I also find it funny when economists wonder about how effective China's stimulus has been compared to the US. It is funny because they are paying for their stimulus programs out of a couple trillion in savings while the US has borrowed more than that for theirs.

The long and short of the original topic is we are having raw materials less and less available as easy harvesting is gone and overuse prevails, at the same time as all the worlds currencies are being devalued by central banks with quantitative easing (money from thin air) and over borrowing to the point interest alone will become unaffordable on some countries debts let alone repaying principle. There is much manipulation of commodities markets public and private, but it does not take a rocket scientist to figure out the long term trend in prices if you are going to buy commodities in fiat paper currencies. Now as to which commodities will go up in “cost” the most compared to others is an entirely different question. The ones with the greatest need and least supply will rise the most. Do you want oil to drive your car, food to eat, shelter to live in, or industrial commodities as a savings account if you have surplus wealth?

 

[Anonymous]

Oz, I agree "China" has control, I just don't buy the argument that the chinese people are consuming so much, they just do not have the purchasing power on a personal level, yes the country is very rich, off of the backs of the people. Americans will soon have our backs broken and enslaved too.


Jim

 

[OMG]

I would say gold is a good investment, particularly against the american dollar stamped paper. I think now that everything is becoming more global, quality of life will even out more across the world. So americans wont be able to waste resources as much as they do now. I think america and other 'big spenders' will be in for a looong adjustment to a lower quality of life. Not just because of globalization, but right now (recession) the rich are deciding to get richer. A lot of people think that a recession means that there is not enough resources to go around... but the resources don't get destroyed... so they are 'somewhere'. Its just banks and other rich organizations taking in profits, and setting up for a new era of people working even harder for the same quality of life.
The other reason I would say gold is a good investment is because people still think of gold as currency, and the amount of available gold is stabilizing since there wont be gold that can be mined anymore. So the value of gold wont go down until people no longer consider it currency.
The banks are trying to keep the price of gold down to make paper money still valuable, because its a heck of a lot easier to print dollars than it is to mine that equivalent in gold. But I don't think the banks (or whoever - china) are able to keep the price of gold low in the long term.

 

[Oz]

OMG,

I agree with most of what you said but I think we will see globalization of goods contract. A very large portion of the worlds large shipping vessels are sitting idle either wishing for a load to carry or being used just to store goods speculating on price change. Much of the globalization of goods was due to the US exporting our manufacturing base to countries that had weaker currencies so lower labor coupled with lax environmental protection made it cost effective. The main commodity the US exported was dollars and much of the world has decided they no longer wish to trade their manufactured goods for a declining currency that is getting over printed.

In just the last month the Dollar has lost close to 10% of its purchasing power compared to the rest of the world’s currencies on the DX. If that trend continues with the US currently importing most of its consumer products the costs will increase to the point were it will become cheaper to domestically produce our own goods again. That would be a good development, but a painful one. Lastly on globalization of goods one has to take into account that transportation costs have little choice but to go up disproportionally compared other goods because of increasing demands for oil.

I am defiantly a hard money fan but like silver better than gold. There is more above ground gold than silver available in the world by far on an ounce by ounce basis, yet look at the price spread. Central banks still hold gold, name one that holds any significant amount of silver. On an ounce for ounce basis there was far more silver in circulation as money than gold when the world was on a metallic standard. All this silver along with Central Bank silver has been consumed by industry, primarily for electronics. I do not see this consumption changing dramatically but I do see that industry has run out of supply from the previous sources as most of the silver that was consumed by them was not recovered like gold. There will be little choice but to have silver price rise to the point that it is economical to recover it from our waste streams the same as gold has been for centuries.

You mention gold as currency. It is tough for the common man to buy an ounce of gold but an ounce of silver a week is an affordable investment. If the world goes back to a metal standard for money it is also necessary to make change for purchases. Without silver for change it becomes hard to buy a loaf of bread with your gold coin. Frankly if we go back to commodity money I see the use of copper and nickel coming back into play. In the US we have already had to change the composition of our coins and pass non export laws on them as we have made our currency worth less than the content of their elements. I only hope that doesn’t happen to extreme were the paper is worth more that what is printed on it like what happened in Germany and more recently Zimbabwe.

 

[Anonymous]

In just the last month the Dollar has lost close to 10% of its purchasing power compared to the rest of the world’s currencies on the DX. If that trend continues with the US currently importing most of its consumer products the costs will increase to the point were it will become cheaper to domestically produce our own goods again. That would be a good development, but a painful one.

It will be painfull for those at the bottom, but for the top and the Government Class, it is just another opportunity. I have been to a few countries were the money to us is worthless, life still goes on there.

As far as standard of life equalling out over the world, that would be a good thing if they were raising the countries with lower standard, but unfortunately, the people we elected think that we need to lower ours.

As far as the value of gold, to me it has aways been the same, just everything else is valued less.

Jim

 

[goldsilverpro]

There are two men in the world that are the absolute experts in predicting the price of gold. One thinks it will go up and the other thinks it will go down.

 

[Oz]

As far as the value of gold, to me it has aways been the same, just everything else is valued less.

James, I like that quote. It is also one of the hardest concepts for many as they have never priced things in relation to anything but paper money.

It is a good exercise to get in the habit of comparing commodities to one another for price moves. A prime example is when the gold/silver ratio was close to 85 a few months ago I urged people that had gold to swap it for silver. The ratio is now down to 65 ounces of silver to buy an ounce of gold. Those that made the trade to silver could now go back into the same amount of gold they had before if they wished, but could keep the 20 ounce difference in silver required to buy each ounce of gold back. That’s a 23% profit in a few months while keeping your wealth in precious metals the whole time.

In the long haul I certainly expect the dollar to loose value compared to gold, but I think gold will also continue to loose value compared to silver.

 

[Oz]

There are two men in the world that are the absolute experts in predicting the price of gold. One thinks it will go up and the other thinks it will go down.

Too funny, and all so true.

 

[goldnugget77]

It looks like everyone in this forum is a gold bug

I go to this web site for ideas
http://www.thebulliondesk.com/

A few months ago they quoted a few European bankers as saying the price outlook for 2009 would be bearish
After a few weeks later the price started going up.
then they started quoting people that were bullish on the metal
In other words
when price starts to rise evereyone says it will go up forever
when it goes down it will look like it will go down forever
It might also be possible that the price is controlled by some group

As a summary it does look like its going higher

 

[Oz]

It might also be possible that the price is controlled by some group

What group would want to control the price of gold?

 

[goldnugget77]

Its not important to know who that group is
It is one of the factors that might effect the price.

 

[goldsilverpro]

If the world banking cartel(s) feels that they will make money by the gold going down or up, they most surely can make it move where they want it by use of such things as derivatives. Also, I have read that 70% of the money in the various markets comes from government investment funds. The powers that be can do anything they want. That's why they have all the money and gold and we don't. That's also why you can't predict gold prices. Most people who predict prices and sell hi-dollar newsletters make the error that everything in this corrupt world works by supply and demand.

 

[goldnugget77]

don't forget that gold is not oil where everything goes up in smoke
it is all saved and reused
there is some lost but that's not much

 

[goldnugget77]

recently i am seeing computer going to garbage
that is gold going up in smoke

 

[Oz]

It certainly affects price if it is being controlled. I personally am sure it is on several levels. I was just baiting you a bit to see if you had commentary that I had not considered.

You might enjoy some of the links that are in this thread. http://www.goldrefiningforum.com/phpBB3/viewtopic.php?f=58&t=4699&hilit=federal

 

[jimdoc]

There are two men in the world that are the absolute experts in predicting the price of gold. One thinks it will go up and the other thinks it will go down.

And they are both right 50% of the time.

 

[goldnugget77]

Hi Oz
Thanks for that link