More Support for Gold's Bullish Outlook 23 comments
- Prieur du Plessis' articles on Seeking Alpha
- Prieur's blog: Investment Postcards
- Subscribe to Prieur's blog
- Prieur's investment house: Plexus Asset Management
- Contact Prieur
an article to
-
Font Size:
-
Print
- TweetThis
This short update comes to you from Cape Town airport where I am awaiting my flight to Johannesburg, and then to Frankfurt and finally Ljubljana (capital of Slovenia) where I will be spending the next few days with a group of South African business people.
I often argued the bull case for gold over the past few months. With gold having surged by $40 an ounce (+4.1%) to $994 this week, it would certainly seem as if renewed interest in the yellow metal is being stirred up.
As printing presses are running at full speed to produce ever-increasing quantities of fiat money as governments engineer the greatest asset price reflation in human history - and the U.S. greenback is heading South - the longer-term fundamental case for the yellow metal is arguably positive.
Good news for the gold price was also reported by Paul Mylchreest’s Thunder Road Report (via Mineweb), stating:
Apparently China is pushing the idea of buying gold and silver for investment purposes to the general population in the way that Western television sells soap powder. If 1.3 billion Chinese citizens start buying gold and silver, even in tiny quantities, imagine what that will do to the market!
The shorter-term technical picture is also starting to look interesting. This is explained by Adam Hewison of INO.com who prepared a short technical analysis of gold’s most likely direction and key chart levels.
Click here or on the image below to access the video presentation.
Seasonally, September also seems to be a good month for gold, with an average gain of 2.6% for the month since 1970.
Source: Plexus Asset Management
I am bullish on gold in the medium term, especially as I believe the vast money printing by central banks could set off strong inflation pressures down the road. It is only a question of time before the $1,000 level is breached and I will not be surprised to see bullion remaining in a secular uptrend in the medium term. Add the yellow metal to your portfolios on pullbacks.
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
David Fry
-
2
TraderMark
-
3
Don Dion
-
4
Cliff Wachtel
-
5
Joseph L. Sha...
Top Instabloggers » -
1
-
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
Some good points. I've been fortunate enough to get a few articles on my take on global trade, and the future of the dollar, published here on SA. I think you're correct in pointing out that global conditions will be the key drivers going forward, rather than economic conditions here. I recently read "When Markets Collide" by El-Erian, I would highly recommend it if you haven't done so already.
On Sep 06 11:55 AM Jan Paul wrote:
> China is now urging its citizens to buy gold. This from a nation
> that used to ban the ownership of gold.
>
> This article is also very bullish for gold.
>
> quote
> Over the course of 2007 / 2008 – more than 5,000 metric tonnes of
> “Gold Compounds” have been exported from the United States of America
> representing more than 62 % of reported sovereign U.S. gold reserves
> or about 24 times annual U.S. mine production.
>
> www.financialsense.com...
>
> ===============
>
> Long article but worth the read if you are interested in the dollar,
> gold and the global moves going on that could impact the dollar and
> gold.
>
> The U.S. continues to use the policies that got us in this mess and
> that is not good for the dollar. More nations are moving to non-dollar
> trade deals and currency swaps and moving from bonds to bills and
> notes they can let mature and not replace.
>
> Things are building and while it could be anywhere from months to
> a few years, the dollar is not going to remain the global currency
> that has benefited for the last several decades. In fact, that global
> abandonment could become the force behind inflation even if we are
> in a depression here. The rest of the world is 75% of GDP and it
> will global demand and global prices that determine what we pay,
> not our demand or what we do here.
seekingalpha.com/insta...
the more gc goes up the more money investors make, the more they make the more options they have to sell one miner then buy the other, then buy on marging, buy, buy, buy then in few weeks they will liquidate it all on a margin call, those who invest only cash will lose too as margin calls will be in billions$
On Sep 06 12:25 PM Old Trader wrote:
> Jan Paul,
I recently read "When Markets Collide" by El-Erian, I would highly recommend it if you haven't done so already.
----------------------...
Good advice, thanks.
On Sep 06 12:25 PM Old Trader wrote:
Jan Paul, I recently read "When Markets Collide" by El-Erian, I would highly recommend it if you haven't done so already.
-------------------------
I just looked up some on this and liked what I read from El-Erian talking about the book
quote
As transformations in individual markets are gathering momentum, it becomes evident that the market and policy infrastructures cannot yet adequately support the emerging realities—at either the national or international levels. Activities that have been newly enabled by the transformations tend to outrun the ability of the system to accommodate and sustain them. The result is a series of blockages and other “plumbing problems” whose prevalence gives rise to an initial bewilderment, turmoil, a blame game, and a subsequent realization that some type of change is needed.
Then when the needed refinements are being undertaken, market participants—investors and national and multilateral policy makers—face uncertainty and worry about the prospect of further turbulence. The market turmoil that started in the summer of 2007 illustrates the type of overshoots and dislocations that are likely to continue to occur. I would go so far as to say that the turmoil will shake the foundation of our global financial system. What started as a problem peculiar to the subprime segment of the U.S. mortgage market has morphed into a series of collapses whose impacts are being felt on both Wall Street and Main Street.
www.pimco.com/LeftNav/...
=====================
Thanks again for the tip.
By that measure if we were to take the Q1 2009 reported US GDP of $14,097.2 billion and divide Q1 2009 total US debt level of $60 Trillion by that GDP number we would get an astonishing record Debt to GDP ratio of 425%.
This is unprecedented and is showing that the US economy is being crushed by the debt that is growing in absolute terms thanks to all kinds of US Government and privately owned Federal Reserve’s liquidity injection and asset prop-up schemes while at the same time the GDP is shrinking. Hence the conclusion is logical that these efforts are not working while they are piling on unprecedented levels of debt outstanding that are not possibly going to be payed back, and therefore will be defaulted on by definition. This is going to blow up in a quite dramatic deflationary bust event soon enough. One can only surmise whether it will be some kind of a credit event such as default by major US coroporation(s) or fear driven bond price drop that may lead to jump in interest rate. But in any case this is going to be deflationary as debt bubble begins to crack at the seams in earnest. It is only a matter of time. By the way, in the week before Labour Day of 2009 gold prices spiked up to nearly $1000 which is indicative of credit stress as investors flee to safety of gold from even the safest U.S. Treasuries. Gold as we know is nobody’s liability and therefore rises during credit stress situation in the economy. Surely this spike was not caused by rising inflationary expectations as gold performs abysmally during periods of inflation as any one can verify it by looking at the gold price decline since 1980 through early 2000’s when economy was in its boom years.
As a side note, the above mentioned Federal Reserve spreadsheet pegs U.S. Federal debt only at $6.7214 Trillion which is obviously excluding the Treasury debt that various Agencies of the Federal Government are holding and therefore make it appear as if the Government ows it to itself. The $60 Trillion figure is therefore a conservative estimate.
On Sep 06 11:10 PM Dan Schmeidler wrote:
> Gold is largely a trade on the dollar. And if the dollar stays strong
> in the interim, the gold trade is off. There is just too much right
> now standing in the way of a sustainable rally in gold. I would wait
> until after this fall to build a gold position, unless you are considering
> to trade it. I would consider trading gold over $1000; who knows
> where it can go above resistance. But I would not hold Gold it until
> after this fall and until there are better and more reliable indicators
> that inflation and a weaker dollar are imminent. The argument for
> being long Gold are convincing, and they become even more convincing
> as we approach resistance levels. But I simply do not believe in
> a weak dollar or inflation at this time. Even with the news from
> China as descibed in this article.
I don't know how they'll do it, but the powers that be will move heaven and earth to ensure the dollar remains in a moderately strong position. My best guess is that the US government, along with their brethren, will start selling their stockpile of gold and buy up USD with the funds. I'd be very surpised if gold holds its current level now that the G20 meeting is over; So while I don't suggest that you go and buy ETF's for $800, this is where I believe the price is headed.
On Sep 06 11:10 PM Dan Schmeidler wrote:
> Gold is largely a trade on the dollar. And if the dollar stays strong
> in the interim, the gold trade is off. There is just too much right
> now standing in the way of a sustainable rally in gold. I would wait
> until after this fall to build a gold position, unless you are considering
> to trade it. I would consider trading gold over $1000; who knows
> where it can go above resistance. But I would not hold Gold it until
> after this fall and until there are better and more reliable indicators
> that inflation and a weaker dollar are imminent. The argument for
> being long Gold are convincing, and they become even more convincing
> as we approach resistance levels. But I simply do not believe in
> a weak dollar or inflation at this time. Even with the news from
> China as descibed in this article.
laurencehunt.blogspot.com/
If you are a bear, a retest failure at 1,033 or 1,061 would trigger a target price between 675 and 850. Once the low target price is reached, a retest of the highs would be imminent within a year.
At this point, I'm 60% Bull and 40% Bear. The bullion banks and governments still have firepower left with fiat dollars and derivatives, but this is changing. Give them between 6 to 12 months and they will be out of ammunition.
Gold is traditionally considered as a safe haven bet. but with stock markets the world over and especially in ASIA , regaining new 2009 highs why is the safe haven required ?
if the markets ( both the commodity and stock) are so confident of a V shaped recovery why are market participants pumping so much money in precious metals ?
i fail to buy up the argument that the worst recession since the great depression is gonna be over in a flash given the mad rush that gold seems to be in ?
the two scenarios that justify everyone falling over other to buy gold are :
1 Devaluation of the GREENBACK !!!!!
2 inflation of the sorts never experienced before so that everything of value will rise everywhere so that keeping a track of the monetary prices will be a futile exercise. and the only standard will be gold !!!
comments please