Gold to $ 1000 an ounce

January 6, 2008 | By | Reply More

What a start to the New Year!
 

Before Xmas we concluded that gold would dither around the $800 mark until March/ April and set our next buying opportunity at $780.
 

We also commented that the price would then head up to $1000 an ounce at a gathering pace by midyear.
 

It seems that we may have been a little too pessimistic and that we will have to reconsider our next dip into the market.
 

The upside, of course, is that we are doing very nicely thank you on our current holdings and we can only hope that our readers have followed our advice and kept the faith and not been tempted into taking the very persuasive short-term profit.
 

 

The question we are addressing is what was the trigger for the stock markets to have performed so badly since trading resumed after the holiday and is this likely to be the trend for the next six months or more.
 

The Bhutto assassination was a terrible crime and we think made many investors around the world sit up and think of the possible consequences.
 

That seemingly everlasting bullish optimism shown by the American investor in the face of the last six months of disturbing economic data emanating from the US may at last be making them face up to reality and to appreciate that there is a great big wide world out side the US that is having its effect on their economy and well being.
 

The perils to the US and West in general that are surfacing from the Bhutto assassination are impossible to calculate but undoubtedly there is a significant risk that a nuclear power in the shape of Pakistan may change its allegiance and add further dangers to a situation that many think is already out of the West’s control.

 

There seem to be new problems arising somewhere in the world virtually every day while those that already exist, such as the sub prime debacle, are expected to worsen.

 

And do our leaders have any answers?

 

Well yes they do. They print more money.
 

They continue to put on the world stage incompetents who seem never to have studied or taken into account the ethnic, religious or tribal influences that have played a major role in the development of so many nations throughout the world over centuries, millennia even.
 

However much we in the West enjoy our way of life, there are many more citizens of the world who do not want to embrace the US way of life, Christianity, or their neighbors from a different tribe.
 

It is time that our politicians, particularly in the US and Britain, arise from the mediocrity that has become the norm since World War II and have the guts to replace their greed for the benefits of office and cowardice and start facing up to decisions that can benefit mankind.
 

Which rant brings us back to the future for gold, silver and the PGMs.
 

The sad truth is that the worse it gets the more we can profit from precious metals but there is a caveat, buyers in US$ and GBPs must balance out the loss in value of these currencies against the gain in the metals price. The Euro or the Swiss franc, possibly the Canadian or Australian dollar, may not suffer as much from depreciation but still benefit from the rising prices.

 

Take a particularly close look at platinum.

 

What with escalating labor problems in South Africa, the major producer, leading to higher production costs and short or long term mine closures as the new safety regulations are enforced and a growing world wide demand, it looks as though the production shortfall will continue to accelerate.
 

In conclusion we are of the opinion that gold followed by the other precious metals will continue their rise with gold possible reaching $1000 an ounce by spring.
 

Much will depend on the value of the dollar and if by some unlikely chance the Fed gains the backbone to halt the decline, close the printing presses and raise interest rates to a realistic level then gold bulls will be on a winner.
 

As far as the man in the street is concerned, whether he be an American or Brit or European there will be pain one way or the other. The choice is “No Pain No Gain” and the longer short term measures are taken then the greater will be the inevitable pain.
 

As usual these are our personal opinions and your investment decisions should be based solely on your own research.  

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