Gold Bubble Still Expanding - Canaccord

Canaccord Adams has hiked its peak gold price by another $150 to $1,100 per ounce now that gold has broken through its previous target of $950. Given the leverage to gold, the firm’s equity target prices rise by approximately 20%.

Analyst Steven Butler told clients:

It is fair enough that gold may be in a bubble, but we think the bubble is still being blown up. Overall global financial market conditions remain weak and we believe the safe haven flight to gold can continue.

While credit risk has fallen from its recent highs, it is as elevated as the first peak last March which coincided with the collapse of Bear Stearns, he noted. However, gold is still below the $1,003 peak set about a year ago.

Meanwhile, inflation may not be registering yet in terms of near-term expectations, but Canaccord believes that it and a general devaluation of paper currencies will be the result of the concerted monetary and fiscal policies to reflate the global economy.

“Gold’s run since autumn 2008 has been a true bull run, rising despite the strength of the US dollar and outperforming virtually ever other commodity and currency class,” Mr. Butler said, noting that it has set recent new highs in Euro, Pound and Canadian dollar currency terms, among others.

Comments

[ROLEXDAYTONA:]

the current gold craze, reminds me Crude Oil craze of 2008, when everybody was long oil, when everybody from small fry is bullish the only thing smart money do - sell gold short.

Feb 19 07:03 AM

[Roger Knights:]

Please do. (I hope you DID.)

Feb 19 07:09 AM

[ddearborn:]

I find it incredibly manipulative that so many pundits are calling the current gold situation a "bubble". What a crock! Gold is still less than a quarter of its 1980 high in inflation adjusted dollars! Not only that but the dollar is being debased by the fed/treasury as we speak. In other words gold is increasing in value every day. The NWO is manipulating the entire world's currencies for trillions in profits. Gold and silver prices have been throttled for any number of reasons by them, all profit related of course.

The world has just whitnessed the biggest robbery in the history of man. And it was perpetrated by the same small group that has controlled the US dollar and now virtually every world currency for for over 100 years.

Feb 19 08:48 AM

[Mad Hedge F...:]

GOLD! GOLD! GOLD! This is the cry being heard worldwide by investors in the Great Gold rush of 2009, looking for a generic “short America” trade. Where in the past gold seekers used sluices, shovels, and jackhammers to extract the glittery stuff in California’s Sierras, Alaska’s Klondike, and South Africa’s Rand, today the instrument of choice is the mouse. Online traders are unleashing clicks by the millions to buy ETF’s, American Eagles, mining shares, and futures contracts. With stock traders sitting on their haunches, wondering if the Dow will hold 7,000, this is the only thing that is working right now. Traders are buying gold more for what it isn’t, than what it is. It isn’t made of paper, made in the US, or held in custody by Bernie Madoff or Stanford Financial. The yellow metal hit a new high for the year of $887 overnight, and the risk of a “melt up” is increasing. The Street Tracks Gold Trust ETF (GLD) is now the seventh largest holder of the barbaric relic in the world. For the newly aggressive, look at the DB Gold Double Long ETF (DGP), which gives you a 200% long exposure to gold.

Feb 19 09:00 AM

[bagman432:]

You're entitled to your opinion even if you are a dumbass. How do I know this? Quite simple. I can call Monex or Kitco and the salesperson is always available in seconds. They also have no problem talking for twenty or more minutes about subjects unrelated to precious metals
I asked them what's going on with their business and they both said that while they are busy they're dealing with a relatively small percent of the population. Does this sound like a bubble?

I suggest you wake up and toss the crap you've been smoking.

Feb 19 09:18 AM

[Carl Spackler:]

Analysts predict Oil will reach $200 per barrel by the end of 2008. Sound familiar? What goes up also goes down and usually when you least expect it. Just to be fair - I like gold on the long term basis. I think a lot of the reasons gold bugs cite are valid - excessive issuance of new money, possible devaluations, unstable governments, etc..., but I think everyone has jumped on the bandwagon too fast and too early. We will see inflation eventually, but we are currently in the middle of a deflationary spiral. This deflationary move has tremendous momentum, and a extra trillion of government spending here and there is not going to break the momentum that quickly. Like a large ship, the economy will continue to lumber down the deflationary path and will turn to inflation slowly.

When all the inflation watchers grow frustrated that they are not seeing the immediate signs of inflation and devaluation, gold might make a sizeable correction. To me, this will be the time to buy more gold. Right now, there are too many people talking about gold. There are gold commercials, gold analysts, hucksters selling Obama gold combative coins - it just smells bad. It is time to blow some froth off the top and set the base for a meaningful rally. That is usually done when there are solid and scary corrections. Just remember Oil. Everyone was bullish and everyone had Oil investments, but there was no one left to propel the price higher. That may be the case here. As someone who is long term bullish on gold, I hate to see people shoot the messenger of caution. This just might be an intermediate top.

Feb 19 10:07 AM

[thegreatyakk:]

The real bubble that is expanding is the supply (or anticipated supply) of the world's various fiat currencies. This is naturally pushing up relative prices of commodities, most notably gold, because they are, of course, denominated in this paper.

Feb 19 12:48 PM

[Jingle-Jangle:]

I always find the defense of the 1980 high price of gold a non-starter for a conversation of where gold should be today.
We can all agree that the high of gold in 1980 was overdone, but it was not overdone by more than a few hundred dollars.
The fed is controlling the rate of gold's increase by having one or two banks short it to void the longs on the COMEX.
If anyone wishes to place a future on the COMEX for gold long, do it with cash and take delivery.
Eventually, a Middle East oil sheik will go long and take delivery and the COMEX will be destroyed by their effort to make good on the delivery. That will be the end game for the COMEX price control and the market will regain control of gold once again.
Fiat currencies will also be ruined by the same action of COMEX delivery orders for several hundred thousand ounces of the metal because everyone holding paper will also scramble to get some real money before it becomes more expensive than they can afford.
The COMEX is the cheapest place to buy gold today. They do not charge a premium.
My plea goes out to a rich oil sheik to buy their gold on the COMEX and take delivery. The sooner the better for all of humanity. The crooks stealing our wealth must be stopped and this is the only way to do it.


On Feb 19 08:48 AM ddearborn wrote:

> I find it incredibly manipulative that so many pundits are calling
> the current gold situation a "bubble". What a crock! Gold is still
> less than a quarter of its 1980 high in inflation adjusted dollars!
> Not only that but the dollar is being debased by the fed/treasury
> as we speak. In other words gold is increasing in value every day.
> The NWO is manipulating the entire world's currencies for trillions
> in profits. Gold and silver prices have been throttled for any number
> of reasons by them, all profit related of course.
>
> The world has just whitnessed the biggest robbery in the history
> of man. And it was perpetrated by the same small group that has controlled
> the US dollar and now virtually every world currency for for over
> 100 years.

Feb 19 03:46 PM

[pooramerican:]

Saudi and middle eastern investors purchased $3 billion dollaris worth of gold lately.
December 2008: comex contracts settled by delivery was about 40%.
February 2009: Gold pushing higher, as British pound continue its slump.
My guess? Europeans money pockets and especially brittons are puchasing gold to preserve their wealth after fears of a crash ala iceland.
Most people around the world who have money and are exiting trades may direct a small percentage of their portfolio to gold, and so may central banks. Imagine what happens if people on regular basis directed 5-7% of their portfolios and savings to gold and silver.
I am waiting for a pullback as I unfrotunately believed gold will dive to $650 on deflation pressures

Feb 19 10:28 PM

[tickhound:]

It is not that gold is in a bubble... It is that everything else in the world was.

Feb 19 10:34 PM

[tickhound:]

It's just the company you keep, and the articles you read... Most Americans "ain't" got a clue.


On Feb 19 10:07 AM Carl Spackler wrote:

> Analysts predict Oil will reach $200 per barrel by the end of 2008.
> Sound familiar? What goes up also goes down and usually when you
> least expect it. Just to be fair - I like gold on the long term basis.
> I think a lot of the reasons gold bugs cite are valid - excessive
> issuance of new money, possible devaluations, unstable governments,
> etc..., but I think everyone has jumped on the bandwagon too fast
> and too early. We will see inflation eventually, but we are currently
> in the middle of a deflationary spiral. This deflationary move has
> tremendous momentum, and a extra trillion of government spending
> here and there is not going to break the momentum that quickly. Like
> a large ship, the economy will continue to lumber down the deflationary
> path and will turn to inflation slowly.
>
> When all the inflation watchers grow frustrated that they are not
> seeing the immediate signs of inflation and devaluation, gold might
> make a sizeable correction. To me, this will be the time to buy more
> gold. Right now, there are too many people talking about gold. There
> are gold commercials, gold analysts, hucksters selling Obama gold
> combative coins - it just smells bad. It is time to blow some froth
> off the top and set the base for a meaningful rally. That is usually
> done when there are solid and scary corrections. Just remember Oil.
> Everyone was bullish and everyone had Oil investments, but there
> was no one left to propel the price higher. That may be the case
> here. As someone who is long term bullish on gold, I hate to see
> people shoot the messenger of caution. This just might be an intermediate
> top.

Feb 19 10:37 PM