Gold going to $700?

[theo]

http://finance.yahoo.com/blogs/daily-ti ... w--;_ylv=3

". . . all good things must come to an end and Yoni Jacobs, chief investment strategist at Chart Prophet, believes gold's best days are behind it. In fact, Yoni believes there's a bubble in precious metals that's about to collapse as detailed in his book, Gold Bubble: Profiting from Gold's Impending Collapse.

While tipping his hat to the bullish arguments and sympathetic to reasons why people own gold, Jacobs says the metal's inability to rally despite Europe's ongoing crisis and renewed tensions in the Middle East are negative signs. "The froth is coming off," he says."


I periodically like to check in on the arguments the other side is using. Nothing really new here, except this guy actually wrote a book on the subject. Its difficult to trust this guy when he demonstrates no understanding of what a bubble actually is.

Some of the comments at end are interesting as well.

"jaykay • 19 hours ago
something is up! the price of gold is behaving very differently the last 2 weeks. price manipulation is happening as usual but i think the price is being artificially suppressed to allow for significant accumulation. somebody somewhere came to the realization that to own physical gold was the correct way to go. somebody knows something about an upcoming announcement regarding the financial state of the union...a formal announcement of QE3 perhaps? its a hunch for sure but i can't shake the feeling. just sharing my thoughts for what its worth."

[barrytrot]

$700 gold is just as likely as the members of this forum starting to sell gold to a "we buy gold store".

i.e. impossible.

1500 gold. Possible.

1400 gold. Remote, but feasible.

That's about the floor.

It's not like gold has done super well for 100 years or something. Quite the opposite. The down side is very close to where it is already. Upside, quite a bit higher.

Although I'm still more bullish on silver, although that might be my predilection to things that take up more space in my house/vault

[barrytrot]

It sort of surprises me that there are SO MANY articles written about nonsense like this. And these guys GET PAID for this!

My job only pays me for things that *work*. Ok, mostly work

If I was paid for just spouting off nonsense I would be hob nobbing with Bill Gates

[SoFa]

Gold went for $700/oz just a few years ago. I don't see why it can't ever trade at that price again.

Gold price might be topping or it could be consolidating for the next leg higher.

[Market Harmony]

There used to be only X amount of money supply out there... now there is X plus much more. I don't ever think we will go back to X

[barrytrot]

Gold went for $700/oz just a few years ago. I don't see why it can't ever trade at that price again.

Gold price might be topping or it could be consolidating for the next leg higher.

Inflation tends to go up. In fact, I'm pretty sure it is up probably 90% of years.

So all prices tend toward higher numbers.

Additionally, gold has only recently gotten more mainstream attention.

You didn't see actual stores called, "we buy gold" until a couple years ago.

Things have changed. And all the changes seem to favor higher gold, not less.

Gold will never be below $1,200 again. Silver will never be below $25 again. Book it.

[daviscfad]

We shall see Barry

[68Camaro]

Agree with Barry. Look at the latest reports. Silver mine production is barely moving - and only because of secondary output from gold or copper mines. Primary silver mine production (mines focusing on silver) is in decline. Coin and bar acquisition is through the roof, and if they accelerate at these rates for only another year or two demand will completely outstrip supply - no matter what industrial production does (which continues to accelerate itself, due to broadened use, despite the recession).

[Jonflyfish]

I don't care if it gold goes to $100 or $10000. I can't influence it either way. What I do know is that markets can and do harm the greatest number of participants because the unexpected nearly always happens and people react by panicking. Some folks say an ounce of gold should buy a decent suit for a man. I haven't seen any mainstream advertisements for typical run of the mill suits in the $1600+ range. Some quote money supply and decide that gold should be $10k+ per oz. Ultimately, people will find arguments to support and reinforce their position. I do not marry my opinions(nor positions). Whatever the price is, it is- hence the term commodity. It isnt sacred nor evil, just one of the elements. Emotion is removed and trades go with the flow.

Best trades to all.
Cheers!

[68Camaro]

Trading is trading. Buying is buying, and a totally different thing - as you know. Most people here are buyers more than traders.

I'm not going to fall on my sword over the "suit" analogy, but... there is nothing like setting up a strawman to knock down. The analogy made wasn't just to a "suit", but an entire outfit with accessories and overcoat - what one would need to take care of business. While one can buy at the discount suit rack - at list price a normal decent (not extravagant) suit runs $400 and up these days, a shirt is at least $50, a tie at least $20, a belt another $20, underwear and socks another $10 or more, a couple hundred for shoes, and another couple hundred for an overcoat. So, without being extravagant, easily $1000. Cheaper stuff can be had (as it could 2000 years ago), as well as more expensive stuff. I could also buy second-hand tee-shirt, flip-flops, and shorts for $10 total, but that's not the analogy, and it doesn't do the same job. The analogy seems to work, well enough, though it is obviously subject to time-local fluctuations.

[barrytrot]

To parrot 68Camaro's argument: When that phrase came out it was when "Men's Warehouse" wasn't even a dream. Back then only "gentlemen" would have a suit of the nature which was referred to by the saying.

Ala an imported Italian custom-tailored suit in today's day and age. Which will run you well over an ounce of gold.

[Jonflyfish]

I won't argue the cost of a custom Italian tailored hand crafted suit. The analogy nor my comment eluded to such however since that would not have been have nor is it today the common suit. I'm not even arguing for or against it. People who argue against justify their position and those who support it, just the same. That's all I was trying to say folks.

Any exchange for goods or services is a "trade" whether the duration is .50 milliseconds in length or 50 generations, it's the same in my book. I'm not here to argue. Like I said, everyone finds reason or support to justify their actions and position. My position is exponential growth in equity via compound rates of return.
“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”
― Albert Einstein

To each their own, since they will have their own hardened ardent opinions.
Cheers!

[Thogey]

Hey Jon,

I'm the dumbest guy on RC when it comes to "markets" I hoard silver. I probably have too much.

I used to have faith in compounding interest, but here's my problem. Maybe you can explain why this should not worry me.

As I understand, the government is debasing our dollars (which should really be defined as a given quantity of silver or gold)

They are doing this by borrowing huge amounts of dollars and then printing more dollars to pay the juice on those loans, hence low interest rates.

Given what I have written is true, and I don't know for sure that it is: Here is my question.

If my interest is compounding and the number of dollars I am earning is growing at an exponential rate but those dollars are being debased just as fast, does that make me a sucker for counting on compounding interest..paid in dollars?

I really value your opinion on this.

[wagsthadog]

Hi all-

Never trust a guy named Yoni.

wags

[Jonflyfish]

Hey Jon,

I'm the dumbest guy on RC when it comes to "markets" I hoard silver. I probably have too much.

I used to have faith in compounding interest, but here's my problem. Maybe you can explain why this should not worry me.

As I understand, the government is debasing our dollars (which should really be defined as a given quantity of silver or gold)

They are doing this by borrowing huge amounts of dollars and then printing more dollars to pay the juice on those loans, hence low interest rates.

Given what I have written is true, and I don't know for sure that it is: Here is my question.

If my interest is compounding and the number of dollars I am earning is growing at an exponential rate but those dollars are being debased just as fast, does that make me a sucker for counting on compounding interest..paid in dollars?

I really value your opinion on this.

Thogey, how are you friend? I think you are extremely wise and extremely intelligent.
To get right to it and answer your question directly, it would obviously be a wash. Having said that, there is no reason "interest" or at the time quoted, short term capital gains, have to be limited or mirror inflation in any way whatsoever. Marginal rates of return beyond the inflation rate and taxes that are reinvested have the chance for the eighth wonder to manifest itself. When this happens it becomes self evident. I'm sure some here will argue against that but then some here will try to knock holes into anything, including black holes
We are all products of our experiences. An individual's paradigm becomes their own truth.

Best to you!
Cheers!

[Thogey]

Thanks Jon,

This is a tough pill to swallow though.

Marginal rates of return beyond the inflation rate and taxes that are reinvested have the chance for the eighth wonder to manifest itself.

But I see your point, what choice do we have?

Invest in our own businesses

[DebtFreeMe]

This guys obviously has no understanding of what a actual bubble is... Unless a large minority of people in the gold market are using credit to purchase their gold (I doubt this), which is how bubbles are fueled, then the fact is that people are actually valuing gold at the price its at and are using actual savings to pay those prices, thus it is not a bubble... Might gold have a pull back and then hover in a range for a long time, yes, but will the price completely collapse... NO...

[SilverEye]

If it does, I will be buying all the way down!

[Treetop]

I must say, I think 700 is very unlikely, but seeing gold bounce off of a 1000 wouldnt surprise me one bit... not that my opinion holds weight. Im pretty much in thogeys boat, probably with a smaller stash, as i build up my homestead here, and invest in the means to own my own life...

[68Camaro]

An individual's paradigm becomes their own truth.

Ah, well that explains a fair amount. Appreciate your honesty.

[OneBiteAtATime]

As Europe fails, PM from old hands and weak hands will be sold like crazy. Silver and gold will plummet as the market becomes flooded with cheap PM. You'd be surprised what you'd trade for a good meal for your children. It won't take long for the strongest hands to acquire the vast majority. Then it will skyrocket to the levels we suspect it can go to. During the short-lived crash this forum will be an uproar. I wonder if I will lose confidence. I pray that I have the confidence and sober-mindedness to take advantage.

[Jonflyfish]

Thanks Jon,

This is a tough pill to swallow though.

Marginal rates of return beyond the inflation rate and taxes that are reinvested have the chance for the eighth wonder to manifest itself.

But I see your point, what choice do we have?

Invest in our own businesses

True to the point. there is no FREE lunch.
Cheers!

[Cu Lung]

If gold hit 700.00, the over on spot would still be 800.00 lol.

[theo]

As Europe fails, PM from old hands and weak hands will be sold like crazy. Silver and gold will plummet as the market becomes flooded with cheap PM. You'd be surprised what you'd trade for a good meal for your children. It won't take long for the strongest hands to acquire the vast majority. Then it will skyrocket to the levels we suspect it can go to. During the short-lived crash this forum will be an uproar. I wonder if I will lose confidence. I pray that I have the confidence and sober-mindedness to take advantage.

What you are saying makes sense. I have the feeling that there will be one more great crash, which I agree will be short-lived; not unlike 2008. However, I think it will be more from the uphevel caused by the destruction of the Euro. PMs will lose value on one final rush to the dubious safty of the dollar. Furthermore I expect JPM and co to turn a bad week for PMs into a disaster with manipulation. I honestly wonder if there is enough gold/silver is in private european hands to have an actual impact on PM spot prices. Perhaps I'm wrong, but it does not seem as though western european culture imbraces PMs in the same way that those in the Middle East and Asia appear to.

[everything]

For us poor end of the chain investors, it might be wise to have more credit cards (with a zero balance of course) on standby, and whatever pile size of cash you have to spend. Then, if a super buying opportunity ever comes along you can have some extra pull.

Oh, Thogey and Jon's comments are interesting. The gold hoarding countries would have to get into some serious recessions to see gold go that low. As it is, India just dropped it's interest rate a half point, and they are going into marriage season so gold prices are not going anywhere for at least a month I'm sure.