Thursday, November 27, 2008

I’m a gold bull but when Citigroup says they are bullish, then it kind of makes you think.

Citigroup says gold could rise above $2,000 next year as world unravels

The bank said the damage caused by the financial excesses of the last quarter century was forcing the world's authorities to take steps that had never been tried before. This gamble was likely to end in one of two extreme ways: with either a resurgence of inflation; or a downward spiral into depression, civil disorder, and possibly wars. Both outcomes will cause a rush for gold. "They are throwing the kitchen sink at this," said Tom Fitzpatrick, the bank's chief technical strategist.

Posted by flintster1994 @ 05:50 PM (1533 views)
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16 thoughts on “I’m a gold bull but when Citigroup says they are bullish, then it kind of makes you think.

  • Given that Citigroup didn’t manage to foresee the desruction of its own balance sheet in a year, why would anyone listen to
    its forecast about anything at all?

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  • citigroup cant even run their own bank so how can we trust what they say?

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  • To clarify. It makes me think that gold could be ramped up for the banks to short.

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  • What real use does gold have, apart from making a few trinkets ?

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  • yep sounds like when Goldman was talking up the oil at $200 by the end of summer.Banks will always be banks. Greed is at the heart of banking.

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  • ” … by the end of next year as central banks flood the world’s monetary system with liquidity”

    I need some clarification on something. The UK is part of the European Monetary Union.

    Can the Bank of England just ramp up the printing presses to get rid of deflation or not? If they can, I’m going to buy gold because I know, they will (the moral hazard issue or screwing over savers and those on fixed incomes has never bothered them in the past), if they can’t I’ll stick with cash.

    Anyone?

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  • Gold is the same as property. Some people already had it , and some don’t. The people who offloaded their property did well, and the people who offload their gold will also do well.
    Its strange that the people who think that gold will go to the stratosphere also think that property will crash, even though property is essentially land.
    Gold is produced, land is not. If the value of land falls, then gold is not going to rise. If the UK government starts printing then land will also rise, probably way more than gold because you can live there.
    I feel like buying some gold myself, but not because I think it is the ‘secret money of the future’, just because I read about it all the time. Make no mistake, if you buy gold you are speculating, you are just gambling, don’t get led on.

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  • Also, does anybody seriously believe that Citibank will announce a winner ? Isn’t it much more likely that they would be as silent as the dead if they truly saw an opportunity.
    I can’t remember where I read this, but if you think you have the lead on a bubble then you don’t.

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  • Sorry for this additional posting, but ask yourself, if everybody, literally everybody, on this site, on others such as ‘marketoracle’ is screaming out buy gold , buy gold, buy gold, do you really think they are giving you a good tip? Please take a deep think before you put any of your money into gold, particularly into the paper market.

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  • last_days_of_disco says:

    I am not screaming “buy gold”!

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  • planning4acrash says:

    It was also suggested by Peter Schiff:

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  • Why not build a house out of gold bricks?
    That would be the best of both worlds.

    What’s the best country to buy physical gold in? The UK has some sort of capital gains tax on it, doesn’t it?

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  • @ paul and titanic there are no 1-way bets. So spread your bets, buy as much gold as you have doubts in cash.

    @ mdmick it seems gold sovereigns and gold Britannias are legal tender and therefore not subject to CGT, but krugerrands are not so would be subject to this.

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  • There are some who are quite adamant that the UK cannot deploy “fiscal easing” (a euphemism for “printing money”):

    http://ukhousebubble.blogspot.com/2008/11/spending-our-way-into-trouble.html

    But I’m not so sure. I’m going to be watching inflation statistics very carefully. If inflation doesn’t keep falling, my money’s piling into gold, because that’ll be the BoE revving up the printing press and priming us for Weimar/Zimbabwean economics..

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  • Stillthinking – think on this. Cash are not savings unless you store it under your mattress. If it is in a bank then you are lending it to the bank, so it is an investment, a speculation that you will be paid back.

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  • Tempeltoncapital says that WITH THE BANK OF ENGLAND in panic mode, slashing the returns-paid-to-savers to three-century lows at the start of December, the clear winners from its campaign to reboot the bubble so far have been gold investors stuck with Pounds to earn and Pounds to spend. Since the Old Lady began cutting interest rates exactly 12 months ago, the number of UK investors choosing to own gold through The Tempeltoncapital Guaranteed Bullion & Commodities Fund has risen by more than 130%.
    So far, at least, they look to have made a wise choice.
    • Since the start of December ’07, the average UK house-price has dropped by 16% (Halifax data);
    • The FTSE100 index has dropped by one-third;
    • Cash ISAs (before inflation) have added just £3.40 to every £100 invested (BoE data);
    • Government gilts – which typically benefit from lower Bank interest rates – have returned just under13% (capital + coupon).
    • The Gold Price in Sterling, in contrast, has risen by more than one-third, up by 33.4% and hitting a series of all-time record highs throughout November above £550 an ounce.
    Manufacturing output, meantime – a key target for the Bank’s devaluation policy – has contracted by around 10% (PMI index), even as the Pound in your pocket lost one-fifth of its international value on the currency markets.
    Here at home, the Pound has lost 3.7 pence of its purchasing power since Base Rate began its descent from 5.75%…down at a near-record pace to just 2.0% today. Cash savers have been hammered by Bank of England policy, in short. And now, like pretty much all government wonks everywhere, the “businessfriendly” socialist authorities are planning to borrow the nation out of its debt-led deflation.

    Tempelton Capital says that will only hurt gilt investors in turn, of course, most especially those hapless fund clients being fed into 5- and 20-year gilts at near-record low yields. Little wonder so many private individuals are opting out of official paper entirely, choosing un-inflatable, un-indebted gold as a bolt-hole for a portion of their wealth.

    Bank Rate now stands at its very lowest level since the Bank of England was founded in 1694. Measured
    against the Retail Price Index (Oct. data), the Bank’s key lending rate now offers an annual loss of 2.2 pence
    in the Pound – the worst loss of purchasing power since May 1980. In the last two months alone, and on a
    proportional basis, the Bank of England has slashed the returns paid to savers at the fastest pace since 1858.
    Gold, on the other hand, has discharged its key duties for UK investors without a word of complaint in 2008 –
    defending them against a collapse in the currency and a fresh outbreak of idiocy in Westminster.

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