Monday, Apr 28, 2008
Which way will gold go?
Safe Haven: Precious Points: The Final Cut?
"The dollar rally and the notion commodities have cracked all seem to rest on this idea of the Fed raising interest rates again relatively soon to contain inflation. The fact, however, is there's little to suggest anyone actually wants a stronger dollar, just a stable currency that will make business more transparent. The wave of inflation triggered by the current easy money policy has only just begun to materialize and, because of the consumer's link to interest rates through their home mortgages, it will be all but impossible for the Fed to make any more than token hikes in their target rate. "
Posted by sold 2 rent 1 @ 02:25 PM (741 views) Add Comment
10 Comments
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1. sold 2 rent 1 said...
Which way will gold go - the red line (down) or the blue line (up)?
2. cornishman said...
Gold is down more than 10% in the last few weeks. Xstrata shares (for example) are up 18% in April alone.
I'm fairly confident that gold will be much higher in the coming years, but don't forget other inflation hedges along the way whilst we're waiting.
What about this scenario?:
Fed hold interest rates - not impossible since the 'tax rebates' are being sent out now. The market is surprised and gold starts to be sold off. The market is flooded with IMF gold for sale at the same time - forcing all the little black boxes to go into selling mode also...
Who knows?
3. sold 2 rent 1 said...
Who knows, indeed?
4. cornishman said...
saw this (old) article at the weekend - you've probably come across it already. Interesting strategy for swapping between silver and gold according to the price ratio; increasing your holding in ounces each time.
http://www.gold-eagle.com/editorials_03/sanders030703.html
5. harold said...
Gold is certainly in a correction/consolidation pattern at the moment, which could see further significant falls (and thus buying opportunities). However, the notion that the dollar is somehow out of the woods is preposterous. Any rally in the dollar will be short-lived. Don't forget, the US is broke to the tune of over 55 trillion dollars (i.e., it's future obligations, that it cannot meet other than by printing money), and therefore massive inflation is baked into the cake. Under those circumstances I would only hold dollars if someone put a gun to my head - which in the world of geo-politics is, of course, a possibility. Anyone in doubt about the demise of the dollar might like to have a look at this:
http://goldmoney.com/en/commentary/2008-04-13.html
And this:
http://goldmoney.com/en/commentary.php
6. cornishman said...
harold - I agree with you about the dollar, long term. I'm only talking about the next few weeks.
Most people on this site thought that house prices should/would start to come down 2 or 3 years ago. It was only because Northern Rock et al kept the ball in the air for a little while longer that we were seen as 'wrong' for that time. We should learn from that timing though and realise that the ball will most likely be kept in the air for a little longer by the Fed.
7. harold said...
cornishman, agreed, and that's why if you are in precious metals, you should be in them for the long/medium term.
8. cornishman said...
ooooooh, that sounds remarkably like what people say about houses... ! lol !
9. jack c said...
@ harold & cornish - I have just posted up a fresh article regarding US$
10. plato said...
Intuition : Down a little for a while then Up,Up,Up,Up ----------- Till 2012 then ???