April 24, 2008
– Comments (11)
How's that for a prediction? Almost as good as the S&P's prediction that oil will be between $41 and $141 by the end of the year.
This predicting stuff is easy.
Between 500 and 1600? That's like saying a baseball team will win with of a margin between 1 and 20.
The King shall cross the Halys and destroy a great empire, hah?
I predict that gold will be between zero and infinity tomorrow.....
imo gold is going to correct hard when people realize that we're either through with rate cuts or this is the last one coming.
In a perfect world gold will drop to 700, I'll scoop it up, and I'll ride it over the next coule of years to 2000.
I just know how an organization which wants to salvage any credibility at this point will come out with this kind of a thing!
Atleus...I have a similar dream....but not to 2000.....my personal feeling is , because of the fact that there is an actual consumption market - by that fact a demand/supply dynamic- to Gold.....there is a price destruction point.....so it really boils down to 2 key exchange rates here - India Rupee to Dollar and Yuan to Dollar ( these are the 2 markets) , the next largest consumer is actuall the Gold ETFs -
So my theory goes - Price capitulation is driven by the fact that if the 2 local currencies do not grow stronger(in real terms) by the same degree as the dollar depreciates over the same period - it becomes costlier in the local market and people move away from buying and to a certain extent become net sellers.
Both of these currencies are not free float -and dont expect them to be for a while.
The investing dynamic is important - it being so big, I think it has more impact on Silver the same way, people will stay on these instruments as inflation hedges , I am very very depressed and concerned by the fact that probably we are looking at a stagflationary environment in US and if it continues for any length a Global depression.
Any thoughts dwot, Maa'm? Always appreciated
I predict that the next president will either be a democrat or republican lol.
Gold isn't up as much in other currencies. The US dollar gets stronger and and gold goes down more in US than other currencies.
Kitco is good for being able to look at graphs of the price of gold in various currencies.
I couldn't figure it out from the website. The link was good though - ton of other info. However, I am assuming you are referring here to the net effect
Local Gold price change % = Us Dollar Change % - Us/Local FX Change%. Otherwise of course it would present an aribtrage opportunity.
My point exactly....although you are right the net is still very high ...let me give you an example.....
Gold and INR to USD prices last year same time XAU : $672 USD/INR: 0.0246yesterdayXAU: $889 USD/INR: 0.0249
So $ appreciated marginally(1%) against the Rupee but gold went up 33% in the period. Net gold became 34% dearer over the year in India. Also during the same period inflation went up from 4% to about 7%. Ie Purchasing power in local currency dropped.
Risk free interest rates are comparatively high ( I think they breached double digits recently or thereabouts) but currency was stable against USD. Over theyear interest rates rose in India, GDP was about 9-8.5% and Interest rates came down in the US.
Now take into account India consumed about 775 tonnes of gold last year up YoY about 9%. Consumer consumption was up about 6% while Investment was up 16%. There are now 3 , (2 major) local exchange Gold ETFs in India - holding 351 Tonnes of the metal. GLD holds about 600+ , I think - that in about 4-5 yrs of existence . Gives you a perspective.
Last 3-4 months Gold export is down some 30% and a lot of traders are actually trying to form a OTC market to influence the price ( market maker) rather than market buyer from London.
Its not demand-supply right now, fringe manipulation of futures , if it ever comes to it, I think the price will correct. These levels are not in a sweet spot for Gold distributors in India - they would love high prices - but as in economics it has to be near the utility curve. The imbalance is , they do not hold much sway , if it changes - things could really get interesting for Gold.
The link I meant from kitco is the one that says Live currency charts and charts comparing $USD gold to all major currencies.
I was looking at from all the different time frames, 30 days, 60 days, etc.
I don't follow gold to the same degree as you do. I don't think normal supply and demand economics applies to gold as most gold never leaves the market.