Jim Grant says we are living in a central bank created fantasy world.
"Gold stocks are astoundingly... and disconcertingly... ...and dismayingly cheap... ...cheap as businesses and as hedges."
And for the music lovers in the crowd. . .
Showing posts with label gold prices. Show all posts
Showing posts with label gold prices. Show all posts
Jim Grant Channels Conway Twitty: It's Only Make Believe
Jim Grant says we are living in a central bank created fantasy world.
And for the music lovers in the crowd. . .
James Turk: Gold headed to $8,000?
At a wonderful barbeque this past weekend a close (and very successful) friend of mine expressed his puzzlement at investors' fascination with gold recently. As he pointed out, it has very little intrinsic value. Well, maybe.
The thing is, as I tried to point out, is that it is very hard to watch your dollars drop in value for a decade with no end to government spending in sight. On top of that, we can never know when the Chinese will pull the plug on their treasury holdings, when the euro will implode overnight, or even what events like these would mean for the dollar.
In the words of James Turk at the 2010 World Mining Investment Conference:
And I guess that's really where I'm coming from now. I don't expect gold or silver to make me rich, but I'd like to preserve some of what I've worked so long and hard to accumulate.
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The thing is, as I tried to point out, is that it is very hard to watch your dollars drop in value for a decade with no end to government spending in sight. On top of that, we can never know when the Chinese will pull the plug on their treasury holdings, when the euro will implode overnight, or even what events like these would mean for the dollar.
In the words of James Turk at the 2010 World Mining Investment Conference:
". . . but even as the prediction may seem extreme, to some, the sting in the tail is that he does not see these levels in the gold price, or Dow, as suggesting real increases in wealth. Rather, such an increase would serve only as wealth preservation as the purchasing power of most currencies is devalued in a hyper-inflationary environment due to the huge volumes of fiat money being pumped into the market by governments in an attempt to stave off global recession."
And I guess that's really where I'm coming from now. I don't expect gold or silver to make me rich, but I'd like to preserve some of what I've worked so long and hard to accumulate.
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Gold falling to $800 by 2012?
In some of the best news I've seen lately, Barclays Wealth is predicting that gold is heading down in price soon.
If "best" news seems a little odd coming from me, (Hey, I'll admit it. I'm a little preoccupied with precious metals.), let me explain. My largest long position is in U.S. dollars. Not because I hold so many, but because my income is 100% U.S. dollars. Sure, that seems OK vs. the euro lately, but long-term I can't envision a happy ending.
A little further on in this Fortune article we read that high prices are leading miners to produce more and "scrappers" to sell more cash for gold. Hey, that makes sense to me.
Still, I think all the money that governments worldwide have (and will!) create amounts to an inflationary pig in a python of biblical proportions. If I have to balance the risk of a drop to $800 vs. a move to an inflation adjusted high, I'll take my chances on gold--even at $1,200!
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Barclays Wealth in London predicts gold will fall to a fair value of $800 an ounce by 2012, as investors eventually dump it for riskier trades
If "best" news seems a little odd coming from me, (Hey, I'll admit it. I'm a little preoccupied with precious metals.), let me explain. My largest long position is in U.S. dollars. Not because I hold so many, but because my income is 100% U.S. dollars. Sure, that seems OK vs. the euro lately, but long-term I can't envision a happy ending.
A little further on in this Fortune article we read that high prices are leading miners to produce more and "scrappers" to sell more cash for gold. Hey, that makes sense to me.
Gold bullion dealer Kitco says places like China and Russia will help boost the amount of gold from mining by 4% to 6% a year through 2014. Because it costs miners about $480 on average to extract an ounce of gold, they plow ahead when prices are high, eventually leading to an oversupply situation.
Gold as $1,200 also brings out the sellers and resellers.
Still, I think all the money that governments worldwide have (and will!) create amounts to an inflationary pig in a python of biblical proportions. If I have to balance the risk of a drop to $800 vs. a move to an inflation adjusted high, I'll take my chances on gold--even at $1,200!
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Will gold enter a mania phase?
As I've said before, DailyWealth.com is often a good read. In this entry, Brian Hunt explains why gold may explode to much higher prices. Interestingly, he feely acknowledges that the highest prices we see in this cycle are likely to be irrational.
Think we're already at the mania phase? Maybe, but take a look at Brian's chart showing gold as priced in euros. If I'm right, gold will also spike in dollar terms, and I expect it to leave the area of the chart and climb at least 3-5 paragraphs up the page. Of course then the question will be, "When do I sell?"
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As we've noted many times in DailyWealth, you can make a good case that this time is different. Never before has the nation with the world's reserve paper currency – which is backed by nothing but faith in a bankrupt government – promised so much to so many people (Social Security, Obamacare, unlimited military commitment).
Think we're already at the mania phase? Maybe, but take a look at Brian's chart showing gold as priced in euros. If I'm right, gold will also spike in dollar terms, and I expect it to leave the area of the chart and climb at least 3-5 paragraphs up the page. Of course then the question will be, "When do I sell?"
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What is a good purchase price for silver or gold?
As always, the people at the National Inflation Association are right on the money when it comes to silver and gold prices. If you're thinking of paying much more than they suggest below--think again.
It's worth noting that you can actually buy silver at spot price in the form of 40% silver Kennedy half dollars (and BELOW spot price if you buy the old 35% silver nickels). I prefer the Kennedy halves as they are so easily recognizable, but below spot has a lot of appeal.
The rest of their opinions on this page are interesting too, but they remind me of one of my favorite quotes:
"It's hard to make predictions, especially about the future"
I'll leave it to you to determine who actually said it, but it sounds like Yogi Berra to me!
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1) How much over spot is a good price for silver and gold?
A good price for a 1 oz silver coin like an American Eagle or Canadian Maple Leaf is 12% over spot, and a good price for a 1 oz silver bar is 6% over spot.
For gold, a good price for a 1 oz gold coin like an American Eagle or Canadian Maple Leaf is 4% over spot, and a good price for a 1 oz gold bar is 2% over spot. The larger premium for silver compared to gold indicates a shortage in the physical silver market.
It's worth noting that you can actually buy silver at spot price in the form of 40% silver Kennedy half dollars (and BELOW spot price if you buy the old 35% silver nickels). I prefer the Kennedy halves as they are so easily recognizable, but below spot has a lot of appeal.
The rest of their opinions on this page are interesting too, but they remind me of one of my favorite quotes:
"It's hard to make predictions, especially about the future"
I'll leave it to you to determine who actually said it, but it sounds like Yogi Berra to me!
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Peter Schiff predicts gold will surge
In March of 2009 Peter Schiff predicts gold will surge as the dollar tanks. Granted, this video is a bit dated now. Still though, do you see any of the factors hurting the dollar changing any time soon?
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