Wednesday, October 31, 2007

A poor article

Gold 'will rocket to more $1,000 an ounce'

The article goes on about supply, demand, oil prices, and inflation hedge - but it misses the target. Gold will go to way over $3000 by 2012. Why? Because the debt bubble will reach an "elastic limit" and the surge in reposessions and bankruptcies, the drop in the number of new loans and mortgages, the falling currencies of GBP, USD and EUR, and falling asset prices of property and stocks will make gold the number one safe haven.

Posted by sold 2 rent 1 @ 07:34 AM (478 views)
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14 thoughts on “A poor article

  • george monsoon says:

    How do I go about buying gold?
    what is involved?

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  • planning4acrash says:

    At current dollar values maybe, what the article is saying is, that even if currencies don’t fall, gold will yield over 6%/yr in capital gains, which is pretty damn good, it will also shirk off a falling dollar/sterling, etc. making it very attractive indeed. I am hoping for a buying opportunity. Any justification for waiting for a short term correction other than those cycles you talk of S2R?!

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  • Gold has no intrinsic value. Historically, it’s been chosen, somewhat arbitrarily, as a benchmark of wealth and an agreed item of exchange based on nothing more than its relative scarcity. The real ‘safe havens’ for the 21st century are going to be: a) Water b) Topsoil and c) Seedstocks.

    Oh, and by the way: d) I’m not joking.

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  • You can buy gold through an ETF (Electronically Traded Fund). This makes buying gold as simple as it is to buy any share. I use LYXOR GOLD BULLION they are quoted on the London stock exchange and have the stock symbol GBS.L

    Simon Lawrence

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  • I think the correction in oil and gold is scoming soon.
    Oil went from 52 to 90 in 10 months
    Gold went from 640 to 790 in 2 months.
    The correction could be short and sharp

    As for what to buy, George.
    As a novice investor go for an ISA wrapped unit trust such as MERRILL LYNCH GOLD & GENERAL.
    This way you will get leverage over the gold price.

    For the bigger risk taker, juinior gold stocks on the Toronto Stock exchange.

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  • Sold 2 Rent 1 suggestion is good. There are ETF’s (Exchange Traded Funds) which track an underlying asset and are tradeable just like a share but you don’t get any gearing – normally, shares in gold producers will move at a greater “magnification” of the underlying price of gold (beware that this goes both ways), however veteran commodities investor Jim Rogers doesn’t buy shares in the companies as they are prone to problems such as spiralling costs of getting gold out of the ground.

    The other option is to open a spread bet on a gold future (tax free) and roll the bet on, indefinately. You can then gear up your exposure to whatever level you like, however spread betting can tempt people to not allow for enough downside in the fluctuations of normal price movements and end up regularly tripping their stop losses and closing the bet with a loss. Personally, I use an ETF, an investment in Avocet Mining shares and three ISA wrapped funds (I max my ISA allowance each year, its foolish not to take the tax break).

    Sold 2 Rent 1 appears to be my doppleganger as I also sold to rent one and put much of my house equity in gold and other resources a couple of years back. In fact, it was after seeing the price of resources rise and reading a book by the aforementioned Jim Rogers that led me to think that inflation, and hence interest rates, would put a stop to the cheap credit. In fact, since that’s played out, its starting to feedback as many seek the diversify from major currencies.

    I’m glad it is turning as now my other half is starting to see things differently about my “doing the opposite to all our friends”.

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  • planning4acrash says:

    Yer, S2R, instinctively that makes sense, but is there any justification other than that the current rise is unsustainable (because the rise would seem sustainable if, as you say Gold is heading to $3000).

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  • Markets don’t rise in a straight line.
    In a secular bull, they get ahead of themselves and then consolidate.
    That is what Elliott wave theory is all about.

    Read the the essays
    http://www.zealllc.com/essays.htm

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  • George Sore Ass says:

    If you want to buy gold, http://www.bullionvault.com is a good place to start. You can buy virtually any quantity (even just few grams) and it’s all locked up in proper vaults in Zurich, NY or London.

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  • George Sore Ass says:

    Whether a correction comes really depends on how events unfold. People have been fleeing to gold primarily as a hedge against uncertainty and inflation. With the Fed looking set for another binge of low rates to try to resuscitate the implosion of yet another bubble, their plan is clear – print money to pay their bills.

    Gold also tends to follow oil and some other commodities. Oil production peaked in 2006, it may that oil production is in permanent decline from here onwards. But demand is increasing fast, with China and India developing quickly.

    There are also a lot of risks around that could see oil and hence gold spike further. The prospect of a turkish assault on northern iraq is quite real, and it’s pretty certain that George Bush will want to make it three out of three failed islamic wars by bombing Iran. Then again, Israel may decide to abide by international law and finally de-annex the occupied territories, thereby paving the way for peace in the middle east. But I ask you, which looks more likely?

    Think too about the whole subprime fiasco. Some seem to think that the danger is over. But it’s only started. NR is still borrowing emergency funds, and the Fed is pumping in more billions to the US markets too. The companies that have announced subprime losses will likely suffer more if the US housing crash continues and prices drop further. All the signs are the bottom is some way off. And you haven’t even started considering the subprime issues in other countries where property booms are turning to crashes – Spain, Ireland, UK, Australia, etc.

    We already saw a run on a UK bank. I’d be surprised if we did not see a bank in the UK or US collapse through bad investments in mortgage debt (IIRC in Finland or Sweden in the 90s the biggest banks went under and were nationalized after the house price crash there). At that point, punters will want their cash out of banks but where to put it? Historically gold has always been the favourite store of value.

    I think even at today’s prices, gold looks cheap.

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  • I agree $1000 is a minimum. It will rocket when the the chinese stock market crashes and all those guys flee to gold for safety.

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  • dohousescrashinthewoods says:

    George, I took a punt on BulionVault with a few grams in Zurich a month or so ago and it all seems good so far.

    Easy enough to use with just a little time to learn the interface.
    I shunned London and NY as this is full-on “nuclear” insurance to buy two plane tickets out of here if the US and UK descend into meltdown and the currencies fall appart. I figure Zurich was a better bet.

    Besides, if gold becomes an astronomical bubble and houses fall completely flat, a small investment now might pay for a home in a few years’ time.. (ok, I’m not seriously suggesting I would buy a house in the UK if things got bad enough to create such a scenario)

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