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Reno Chris

Predictions For The Direction Of Gold Prices For Oct. 1

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So where do YOU think the price of gold is headed over the next six months? Since gold peaked in 2011, every surge upward has peaked at a lower price point, repeatedly failing to reach the price where it turned downward the last time it moved up. Its been more than an year and a half since we set a new high price in gold - and thats a long time.

 

So is gold still a good investment? After years and years of solid upward movement is gold's long bull market run over? Big billionaire investors like George Soros are getting out of gold. Smaller momentum investors who were chasing gold's price appreciation using ETF funds like GLD are also getting out in droves. Talking head investment experts on TV are saying that now is the time to get out of gold, that inflation is under control, economies around the world are slowly recovering and National Reserve banks around the world are about to start serously reining in and cutting back on money printing and quatative easing. A number of them are predicting gold prices in the $1300 to $1400 range in the next year or so.

 

So is it time to sell all that gold you have been saving up and get out while you still can?

 

There is a theory of investing known as contriarian theory. It states that when everyone loves some stock or product and thinks its going to the moon, that is usually the time to sell, and when everyone thinks its going down forever is often the time to buy. It only has value as a concept when sentiment gets too lopsided. Warren Buffet put it very well - Be greedy when everyone is fearful and fearful when everyone is greedy. Everyone hated gold when it was at $285 an ounce. It was called a barbaric relic of obsolete monetary systems. Yet few investments have performed better since that time. The time that something is hardest to buy is actually the best time. Yet everyone loved gold when it hit $1900 per ounce - and its gone down to $1600 since then. When everyone was excited about gold at $1900, that would have been a terrible time to buy in.

 

Yet the causes that made gold go up in the past are still the same - politicians continue to print money and spend irresponsibly so they can get re-elected. Whenever any politician tries to be anything like responsible, they promptly get voted out of office (no matter what country they are in). Governments continue to tell us there is no inflation when it is obvious that there is.

 

So what do I think is coming for gold in the next 6 months? I think it wont do much, bouncing up and down in a fairly narrow range. If I had to make a guess, I'd see gold at maybe $1550 per ounce on October 1, 2013. I don't recommend going out and investing all your money in gold, but I don't think its time to panic, either. Still, gold may well be going back down to $1500 per ounce - maybe even lower before it turns around, but I see this as a correction, not a collapse. More and more people are turning against gold and I think in the next year or so we will reach a point where it is strongly disliked eoungh that it will once again become a very good investment, just like it was when it was hated at $285 per ounce.

 

What do you think?

Where do you think gold is headed in the next six months and where do you think gold will be on October 1st?

 

I am interested to hear your comments.

 

 

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Chris - I'll take $1,650 oz for now but let's hope for a run at $1,750 oz towards late Oct. / Nov. The reality is that no-body can say anything is clear-cut these days except for the big two - Death & Taxes. The Market for Gold seems to be at the mercy of so many other things which are obviously being manipulated one way or another. You only have to look at the news each day. The Dow & the S & P 500 are hitting Record Highs - again. Do people generally feel as well off today as they did in mid 2006 ? Naturally big money is always chasing ever larger returns and with so much free Liquidity sloshing around in ( ALL ) the Markets, it looks to be so large now ( Hedge Funds / GLD / Futures Contracts etc. ) that it ( the low-cost Speculative Money ) probably has the influence to sway the price of Gold by maybe as much as $250 oz either way. It could well be that in the excitement of jumping on the Wagon for a quick profit, the Speculators ( big and small ) overshot it's fair value at $1,900 oz by as much as $250 oz., possibly more. Gold at $1,650 oz could well be fair value for the time being. Tomorrow is another day and maybe even another crisis. ( Korean Peninsula for example ? )

 

Fundamentally, I think Gold is now, to a certain extent at least, Underwritten by massive increases in Exploration and Production costs. Reading the paper this morning and yet another Gold Mine has gone in to Liquidation. Admittedly they have struggled for a while now with high costs and low grade Ore but they are not the only producers who have Cash Costs which exceed $1,100 or $1,200 oz. I know of one in the Pacific which has Production costs of $1,663 oz. Who knows, they might have Hedged their forward Production for 4 years when Gold was at $1,800 oz. Bottom line is, we are being told Inflation is virtually non-existent. Is it my imagination or has the cost of living gone through the roof over the past 4 or 5 years ?

 

Supply and Demand is another aspect but with all this creative Accounting and Financial Engineering surrounding the so-called " Leasing " of Gold by Central Banks etc., how does anybody Account for their Gold Bars ? In fact, could somebody please tell me how on Earth does anybody " sell " ( Short ) a Gold Bar they don't own, they don't want to own, they don't care who owns and which they are never likely to ever see, touch, carry, hold, covet, weigh or polish ? That one is beyond me. I think the Supply and Demand fundamentals though are already starting to change with a preference to " Physical " instead of " Paper " Gold. It's seems to be driven by " Counter-Party Risk ". No-body trusts each other as much these days. Germany for example wants it's Gold back. There's a big swing underway towards holding your own Gold. Wouldn't you rather concrete your Gold Bar in to the Floor of your Basement than trust it to a Cypriot Bank ? Who in turn gave you a Receipt, written in Greek, that promises to return your Gold Bar " On Demand ".   

 

On the downside, our biggest fear is a strong US Dollar. Fortunately, Uncle Ben doesn't look like he want's that any time soon so whilst it does mean a few less Corona's ( Cervejas ) on your next Cruise South, it does bode well for a strong Gold price at least over the next few years. 

 

In summary, I think we live a vastly different world today than what we did just a few short years ago. If you're lucky enough to have some Gold, I would only be selling what I needed to sell. Set the rest aside somewhere safe for a rainy day.                                  

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I think one thing we all can agree on is that it is getting harder and harder to produce an ounce of gold. Over time true scarcity will drive prices higher. In the short term though there are bubbles building elsewhere that are attracting the cash. If you have a lot of money to invest right now, where do you put it? The stock market is on another tear. I am looking at real estate, which I still believe is a good investment after getting hammered down, and now making a comeback. Gold - I am more than happy to go get some, but not willing to invest in it. I will put my bet for October 1st in at $1400.00

 

So says the worst predictor of gold prices on the planet.

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The reason we are being told that there is no inflation is because Food and Fuel was removed from the consumer price index.  They are also offsetting inflation by balancing the inflation against reduced real estate prices.  Another example of creative accounting.

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Ask the chinamen as they control over 90% of the strategic metals production. Lil' North Korean One Hung Low and his declaration of war on South Korea has killed all comprehensive speculation as ya never know what that lil'ding dong'll do with the A bombs???John

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What's happening to the Gold Price these last couple of days ? Just because we start a discussion about it, the Hedge Funds start flexing their muscle ? A demonstration of their Market power perhaps ? Actually it looks like some comments that were made about winding up QE later this year have been seen as an opportunity by some. As a result, the big fish are probably doing what they shouldn't really be able to do - Selling Gold they don't have. ( Shorting the Market )         

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Gold saw its record high of just over $1,920 an ounce in September 2011. Starting to get a bit far back in the rear view mirror.

End of bull run?

http://www.mining.com/gold-prices-falling-trend-just-the-aftermath-of-a-bull-run-finished-in-2011-report-63918/

"While global gold production continues to rise by a small amount each year, analysts at National Bank recently predicted that a “production cliff” will kick in around 2017 in which supply will begin to fall sharply. If that happens, it would have a profound impact on the market."

http://business.financialpost.com/2013/03/05/gold-price-not-high-enough-to-sustain-miners/

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Excellent thread, Chris!

 

Isn't optimism what drives us all!! :)

 

Subconciously we "know" something...

 

We "know" gold WAS $about $20 USD an ounce. That was because there were 20 dollar gold pieces in circulation as currency.

 

Gold floated under US Government control to $35. an ounce until President Nixon demonetized gold prices circa 1973.

 

Gold entered the "free market" system and was/is traded as a commodity along with silver.

 

We "know" gold has increased in value!

 

Why?

 

Gold is directly related to "fundamentals". The fundamentals are things like rampant taxing and spending by sovereign entities i.e. all of them! When govenments become financially unstable - "bankrupt", then "private entities" begin to find places to put their cash. Because cash is devalued by inflation and printing presses, those two things make cash worth less and almost worthless.

 

My forecast is that gold will be affected by trading - but you can't print gold. WE collectively have to MINE it. As a currency or as a commodity, gold will remain in high demand! The fundamentals are not changing.

 

The only way is up. :)  I envision $2000 by October. (possibly more!)

 

- Geowizard

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Guest Chris Ralph

A lot of times bottoms are marked by panicked selling that look a lot like what we saw on April 15th.

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Many times investors set stop loss points where, if the prices gets below that level, computers automatically sell to stop further loss. The problem is that this dumps supply (gold, stocks, etc) onto the market for whatever price can be had. It can lead to a snowball effect where one stop loss dump begets another and another, quickly leading to panic selling as the price drops off a cliff.

 

Since the couple days of big fall, gold has not done too bad and we are slowly recovering our losses.

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Guest pitchak

I'm just an old logger turned miner.No one has ever accused me of being too smart.2 yrs ago I moved my 401k into gold.getting ready for retirement.Sounds like a bad move.I'm in proof coins ,so thats better than bullion,but----- I just don't know for sure.Gonna have to hit the claims hard this year.

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I've been noting how many "talking Head" experts are now saying stuff like - The gold bull run is over or The true value of gold is $800 per ounce. An investment guru whom I follow that has been stubbornly bullish on gold for a long, long time has now turned bearish.

 

Gold is doing well today - up $40+ dollars - but its been terribly oversold, and I think for the short term it may be up a bit more, but I think it will drop back down to below $1400 at least one more time before beginning a longer term uptrend.

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