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Gold tumbles over the last hour, hitting support (as the technicians might say) of $1,610....
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Tuesday, May 8, 2012, 9:46 AM ETGold tumbles over the last hour, hitting support (as the technicians might say) of $1,610. Beyond that, the next stop on the charts may be Dec. 2011's low of about $1,525. GLD -1.6%. The gold miners - as usual - taking it worse, GDX -3.2%.
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This news story has 27 comments:
http://yhoo.it/I6aP7D
I've claimed that gold will fall hard for a while already. And shorting the miners (GDX) has been my favorite way to profit.
Buy my book!
Buy more phys on the dips using the proceeds.
Keep your book.
Not sure when this will happen though, and not in a straight line. Wasn't aware of your work as I'm too busy enjoying the "gold goes to $12,000" BS articles...
:)
Keep up the good work, you're onto something. There's only a handful of us on that line of thinking now, but crowds will follow when the air comes out of the 12 year run-up.
I'm not out there stocking up on PMs preparing for armeggedon. And I tend to subscribe to the Buffet view, which is that PMs aren't useful in economic creation activities, which is where I try to put my money. Simply, I don't buy into the "zero hedge" crowd, which appears to be a bunch of jewelers trying to pawn their metals on John Q.
But betting for gold dropping to $700 is just ridiculous unless the entire world economy comes to a crashing halt, in which case holding gold at any price may look like a smart move, not that I am predicting or suggesting it.
The bottom line is the USD isn't as mighty as it once was, and between the politicians and bankers, I don't see the trend reversing. So you can short gold all you like, but personally I'll buck the current short trend and use the opportunities to find deals, probably among the miners.
This time is not different..
Reason I think the author's reference to $700 (I would say $800) is a possibility is that this is the approximate marginal cost of production (90th percentile of miners).
If you accept that inflation is unlikely to hit double digits in the 3 to 5 coming years because of the magnitude of the de-leveraging shock experienced by the global economy, then gold's value should indeed converge toward the marginal cost of production as any other level is based on what one thinks others may pay for it ("Greater fool theory").
As time passes and raging inflation does not materialize (again, if you accept my premisses, i.e. no double digit in the 3 to 5 years), then the ranks of "believers" should thin out and $800 would not look ridiculous: that's where gold traded as recently as 2008.
Just a thought...
Keep the book, sell me whatever it is that you are smoking.
What's your take on silver? Heading back to $5/oz too?
What's the title of your book? The great economic recovery of 2012, co-authored by helicopter ben?
http://bit.ly/JbNqFh
You did not "make" 5000% because your purchasing power also decreased by upwards of 85% over this time period. By the same token that you have "made" money holding gold, you "made" even more in the late 70s. ...But then what happened? If you haven't sold for 45 years I doubt you will now, and when gold (eventually) does mean-revert again, as it did in 1980, you'll be left exactly where you started and with absolutely no capital gains to show for an entire lifetime of opportunity.
Equities>Gold
Pus, if inflation returns, I doubt house prices would not at worst stabilize, and probably rise at least some.