Gold Set for Huge Rally

The gold price is poised to break through $1,000 an ounce this week and could reach $1,500 before a price consolidation. On Monday gold and silver closed higher while global stock markets fell as the five-week rally ended.

This is an important trend reversal and marks a shift by investors to safe haven assets in advance of another plunge in equity values.

The US dollar also strengthened across the board and bond prices rose. It is unusual to see both gold and the dollar rising together but again this normally signals an important trend reversal.

Money supply growth

The fundamental case for investment in precious metals has also become overpowering. Global bank bailout and stimulus packages have resulted in a huge increase in global money supply that has never had any effect except inflation in all history.

The gold supply by contrast is relatively fixed and production is actually falling. Supply is even tighter for silver – where stock levels are a hundredth of gold – and that is reason enough to expect the established pattern of silver outperforming gold will be repeated again.

As investors rotate their assets out of stocks and into alternative asset classes the best returns are therefore likely in precious metals, and such information tends to be self-fulfilling.

There are all sorts of minor trends supporting this basic trend, and like any true bull market there will be a compounding of supporting evidence: from a shortage of gold available for bank leasing to UK Prime Minister Gordon Brown’s call for IMF sales, often seen as a contrary indicator as his previous calls boosted gold prices.

Trend is your friend

However, in all investment markets it is the trend that is really your friend. The next dilemma will be how to best leverage the upside to the gold price.

This will start with a debate about silver as a better alternative. But then gold and silver stocks will come under the microscope, and the value of the bombed-out junior stocks brought into focus.

It can be little consolation that great days lie ahead for gold for this signals the failure of the conventional investment universe, and that means further horrors ahead for currencies, stocks, bonds and real estate.

Comments

[PeteK:]

Gold is the most unpredictable,
up or down. Don't hurt to get
a few gold mining co.

Apr 22 03:57 AM

[rick12345:]

Because golden eggs are more scarce than sick chickens at the moment and the farmer is rapidly depleting his stock of fodder to feed those sick chickens. Since he does not have enough money in his bank account to nurse these ill chickens to helf, he needs to sell some of his golden eggs to buy chicken feed so that his sick chickens can lay more golden eggs. Meanwhile, the farmer down the road who has no sick chickens and is fully aware of the farmers unfortunate circumstances, has agreed to exchange some of his excess fodder ( which is just rotting away and doesn't earn him money anyhow ) in return for those golden eggs and a share of any golden eggs that are laid in the future. You see golden eggs are harder to come by during a drought, and the rich farmer knows that the more golden eggs he has in reserve, the more likely it is he survives the next drought. Also, in order to help some of the sick chickens on the other side of the world, a wise farmer decided that it would be a good idea to blend his diminishing stock of fodder with genetically modified feed in an attempt to resuscitate his dying chickens. This only made them even more sick as they became fat
and refused to lay golden eggs, so that now the farmer was not only left with all of this worthless chicken fodder that nobody wanted, he also had no golden eggs.
The moral of the story kids, is that the golden egg will last forever whereas the chicken will eventually die. It is better therefore to nurture those eggs till they hatch, rather than fatten up the one chicken, ready for Christmas???



On Apr 21 06:43 AM Freya wrote:

> rick12345: did you by any chance read anything about the G20 outcome
> regarding the IMF?
>
> The tripling of the IMF's loan abilities? China was consulted and
> is getting a say in how the distributions take place.and what conditions
> are attached for their cooperation. Russia is in a deep recession,
> if they buy Gold it will be through a Line of Credit from the IMF.
>
>
> The Indians like in India? They were there too.
>
> It is in China's best interests to keep the USD up as they go shopping
> for Commodity Companies, why buy the eggs when you can buy the chickens
> instead?

Apr 22 05:01 AM

[wes mantooth:]

Some of the same people that bought gold at the beginning of this bust are now selling it to make their mortgage and increased tax payments. Gold will not break it's high until inflation takes hold. That's not happening right now and probably won't happen until 2010 at the earliest. Gold is currently in a trading range and I wouldn't touch it until it takes out at least $1,050 an ounce.

Apr 22 07:14 AM

[Justice Kinky:]

I bought physical gold about a decade ago and I've held on to every iota of it since. I doubt that gold will rave and tear its way to the moon anytime soon, principally because it signals economic doom for printing press pundits and numerous forces are aligned to make sure that gold stays "in its place". That said, there will be a consistent rise in gold as this mockery of monetization plays out across the globe. I'm betting my silk pajamas that we're looking at the same steady rise over the next few years give or take a few jumps here or there. Despite all the fluff about gold being a speculator's playground, I've seen no signs of anything but a fundamentally secure climb to higher ground as fiat floodwater swirls around in ever-increasing volume.

If gold does balloon up occasionally, it will fall back to its original "store of value" levels. Gold bugs madly salivating for a miraculous take off will be confronted with either selling their gold at such punctuated highs for ever more worthless fiats or investing in even more shaky markets. They'll hang on to their gold of course.

The question is: If gold soars, where will profit-takers invest? After all, gold is a harbinger of weakness in other markets.

I like to think of gold in the same way that evolutionary biologists think of "Punctuated Equilibrium".

PE is a theory in evolutionary circles put forward by paleontologist Stephen Jay Gould which states that most species experience little change for most of their geological history, showing what appears to be stasis in the fossil record. According to PE, phenotypic evolution might actually occur in rare, rapid events of branching speciation. In other words, sudden ripples of change followed by millennia of such unnoticeable advances that it seems pretty much nothing is happening.

Gold is like that.

Gold bugs, evolutionists: what's the difference? They all sit around equally crazily expecting to find mystical signs of rapid advancement instead of minute changes and pullbacks to zero constants.

A hundred years from now, an ounce of gold will still buy what an ounce of gold used to buy.
Gold is important to preserve a fortune, not to make one.

Apr 22 12:46 PM

[capt Brian:]

I gave you a thumbs down because I don't agree with your plan. If you hold a decent [proper] % of Precious metals in your 'folio, why would you wait til the price goes up? Just an honest question, not being a brat. I agree gold will go up too, but why pay $1050, when I can buy it for less now? I am not 'in' the stock market until it decides what it is gonna do. ( I do day trade ) but no 'positions' for now except PM's...(no stocks, just physical for now)


On Apr 22 07:14 AM wes mantooth wrote:

> Some of the same people that bought gold at the beginning of this
> bust are now selling it to make their mortgage and increased tax
> payments. Gold will not break it's high until inflation takes hold.
> That's not happening right now and probably won't happen until 2010
> at the earliest. Gold is currently in a trading range and I wouldn't
> touch it until it takes out at least $1,050 an ounce.

Apr 22 05:46 PM

[capt Brian:]

I am waiting.... [tapping toes], if gold is gonna go up to $1000 this week, it better get some legs real quick now,... we are watching you..

Apr 22 05:47 PM

[Justice Kinky:]

LOL


On Apr 22 05:47 PM capt Brian wrote:

> I am waiting.... [tapping toes], if gold is gonna go up to $1000
> this week, it better get some legs real quick now,... we are watching
> you..
>
>

Apr 22 08:25 PM

[MGA_1:]

Gold, gold, gold. Who knows what will happens but it's been surprisingly resilient around $890 or so for the past week. Hmmm.... $1500... I wouldn't bet on that. I'd feel comfortable with $1100 by years end and an uptrend from there, BUT, that will not be without ups and downs.

Apr 22 11:10 PM

[rick12345:]

The comment I like best is "gold has struggled around the 890 resistance".
Yes, this is true, but the same can be said about equities struggling to go beyond 8000. We're caught in a sort of "tug o' war" because people bought at the top of the market just before prices came crashing down (eg, 8000, $890 or whatever). Sooner or later the market will clear itself of these buyers, and will pull one way or the other ; up or down.

Apr 23 04:06 AM

[wes mantooth:]

Why $1050? Because that would definitively break it's all-time high of $1033. Plus, I believe deflation will be very persistent. More persistent than people think. I'm no gold hater btw. I have some physical. I'm just not that enamored of it right now for my trading accounts.


On Apr 22 05:46 PM capt Brian wrote:

> I gave you a thumbs down because I don't agree with your plan. If
> you hold a decent [proper] % of Precious metals in your 'folio, why
> would you wait til the price goes up? Just an honest question, not
> being a brat. I agree gold will go up too, but why pay $1050, when
> I can buy it for less now? I am not 'in' the stock market until it
> decides what it is gonna do. ( I do day trade ) but no 'positions'
> for now except PM's...(no stocks, just physical for now)

Apr 23 07:07 AM

[rick12345:]

Now here's the way I'm reading it, for what it's worth-
An injection of $2 trillion (conservative estimate) of printed money into an economy that pruduces roughly $14 trillion in GDP output ; that's about 14% of GDP. Now I by no means claim to be an economist, but that's gotta have one hell of an impact on inflation over the next year. So, if the price of gold follows roughly the trajectory of inflation, then $1200 ain't to far off track.As for deflation, forget about it. Notwithstanding some major catastrophe, the economy will slowly expand from hear; It's clear, since there appears to be a lot more good news now than there was 6 months ago. The stock market will still crash, as it is run by short selling cowboys and speculators who couldn't hold a position if their lives depended on it.
Falling $US + rising inflation = High gold price..

Apr 23 07:57 AM

[capt Brian:]

This is not a good comment. It is really the same as the originator saying it 'will' go to $0,000.00 Neither can claim to a crystal ball. I think each owes the other an apoligy for being a little bit nasty.

Gold can go up or down, and only that 'will' word can be used such as "old will go up or down" not will go to a certain number.

Can't u folks b nice?

Capt. Brian
(running a happy ship)


On Apr 23 02:06 AM Freya wrote:

> Read my lips: Gold will not go above $1,000 this week or next week
> or the week after.
>
> Those of you who are foolish enough to follow the advice given better
> consider the source. Peter kept his Bear Rally stance all of the
> way up. And you lost.
>
> Now he is pushing you into Gold: Buy it Now!!!
>
> The Stress test, the Short Squeeze, the Auctions, etc. Not enough
> Gold to cover! Remember the COMEX!
>
> What does Peter know that the rest of you don't? And if we know,
> the Market knows as well.

Apr 25 01:56 PM

[capt Brian:]

Old article revisited. Most folks wanted you to be spot on. I think you did pretty good. Okay we didn't see 1000 or panic buying to $1500 BUT, we did see some nice buying, and if you are investing in something, you do NOT want it to skyrocket [unless in a day trade]. I think gold is going up to well over $1500, but have no idea when. I certainaly will not put a date on it or say it "WILL" go to a certain price and for sure, not gonna say when, even if I pick a target.

I think Precious metals will continue to rise in value over the time. Little by little and that falls in with my plan just fine.

Go find a stock that is slowly increasing in value and price. It's chart looks like a nice hill climb on a Sunday afternoon, not the Pikes Peak Race. {I am hopin' that is how the PM's do it}

A lil pat on the back to the author, and keep creating good articles. But exit the 'will', and use 'should' like my broker does so he does not get into too much trouble.
HAVE FUN!!! DAMMIT!
Capt. Brian

Apr 26 09:57 AM

[capt Brian:]

WILL WILL WILL WILL WILL, HEY DUDE, WRITETHAT A THOUSAND TIMES ON THE BLACKBOARD BEFORE YOU GO HOME.

SORRY, I WANTED IT TO HAPPEN TOO.

BUT DON'T BOTHER WITH THE WILL WORK ANY MORE HUH?

Capt Brian

Apr 28 10:36 AM

[one eye:]

On April 23rd, Freya wrote: "Read my lips: Gold will not go up above a $1,000 this week or next week or the week after." This is the week after.

Meanhile His Highness is still pushing on a string willing Gold to go up and the Stockmarkets down.

Eventually, he is going to be right.

May 07 02:24 AM

[wes mantooth:]

Whatever happened to that huge rally? Gold's down over 10% since this article was written. Straight down too.

Actually, I'm more bullish on gold now than I was when this article was written. If liquidity is indeed coming back, and it appears that it may be, then gold should resume it's 2003-2007 price climb. I think I'll buy more physical this week.

May 17 10:17 AM

[Freya:]

So much for Gold $1,000, and if you are still Bearish on the Market, you haven't had much fun there either.

I guess it will be Next week.

The really big question is if the scenario doesn't pan out as planned, wither Gold then? Or does it really matter? Will you continue to ignore the trend?

Apr 24 04:52 PM

[Freya:]

rick12345: You and I are in total agreement. But the $2 Trillion isn't going to be injected overnight.

But making a statement that Gold will be at $1,000 by Friday's close and will continue to go up to $1,500 without pause is way out of line. There is no logical explanation.

Heck, I'm in the Hyperinflation Camp over the next couple of years with a crashing dollar to boot.

Apr 23 11:06 AM

[Freya:]

rick: Golden eggs? how about the Easter Bunny, the Tooth Fairy, and don't forget Jack and his Magic beans. Peter Pan? You must believe and you can fly.

I deal with reality, I don't believe in Magic.

Apr 23 02:17 AM

[Freya:]

Read my lips: Gold will not go above $1,000 this week or next week or the week after.

Those of you who are foolish enough to follow the advice given better consider the source. Peter kept his Bear Rally stance all of the way up. And you lost.

Now he is pushing you into Gold: Buy it Now!!!

The Stress test, the Short Squeeze, the Auctions, etc. Not enough Gold to cover! Remember the COMEX!

What does Peter know that the rest of you don't? And if we know, the Market knows as well.

Apr 23 02:06 AM