Gold: Past, Present, and Future

It’s all just one big game right now. Gold keeps sliding toward the 1610-1625 range, the Dollar is tanking, and the stock market is somehow ripping higher... we'll see how this plays out. Personally, I'm watching to see if the Dollar hits 77 by February or March.

analogharbor44 said:Straight out of thin air, obviously!

Nah. It’s coming straight from the data.
I track it, I read it, and once I hit my limit of available info, I let it all marinate until the picture becomes crystal clear in my head. Then I drop the verdict. 42! 😁
And hey, this exact same forecast is being pushed by some big-shot guru who loves preaching about market cycles and claims he isn't part of the "inner circle," even though he almost certainly is. 😁

darksurfer37 said:Just for the record... an asset loses 15% in a matter of days, yet people are still talking about "savings."
I certainly hope nobody is foolish enough to consider saving in PMs.

And a vital note: any saver should view a 15% swing in a few days as an equal red flag whether it's up or down. Direction is irrelevant.

Trading is an entirely different beast... those fluctuations are actually quite welcome for us.🙂

The central banks are likely thinking the same thing. They'll drop about 20 tons over the next few days. Let them continue this mindless shorting...

http://kingworldnews.com/kingworldne...n_Selling.html

And absolutely, one should save in precious metals—provided it’s long-term saving and you're buying at these deep dips. These kinds of heavy corrections, where the market doesn't fundamentally break its long-term price level, are signs of a healthy bull market that actually needs the pressure. On the other hand, those shorting it are slowly sawing off the branch they're sitting on. Right now, the gold-to-silver ratio is at 55, which looks like a decent entry point for silver to me. If it climbs above 60—where I bought most of my silver—I'll be very tempted to beef up my position. The only thing holding me back is the thought of hoarding for a potential deflationary spike. Especially given the whole fiscal cliff situation.

I wouldn't dream of saving in this, at least not with my core liquid assets. We're seeing acrobatic volatility here, which gold and silver are just starting to reflect:

http://www.google.com/url?sa=t&rct=j&...AspcvpouinZEtw

The European Central Bank has doubled its balance sheet in five years, while the Fed has nearly quadrupled its monetary base:

http://www.google.com/url?sa=t&rct=j&...EBSQXL-jEswXQA

One also has to wonder if the owners of the bullion dealers are truly that incompetent, or if regular people are smart enough to have sold their gold and silver at the absolute peak. I don't think so...

quiettrucker12 said:If everything plays out according to plan, I'm still looking at a target of 1870-1880 for February or March.

I think you already mentioned those November/December numbers—at least from what I managed to gather while reading through everything. By the time March rolls around, the target for May or June will probably still be sitting right in that 1870-1880 range, I guess.

How does the fiscal cliff look to everyone right now? Under the most optimistic forecasts, we might cut the deficit in half—down to about $550 billion—which would shave roughly 3% off the GDP. The same analysts predicted a 4% growth rate for 2014, which seems unrealistic once you factor in actual inflation. In my view, you need to add at least 1-2% to those GDP numbers and another $100 billion to the deficit, bringing it to $650 billion. That’s still a massive deficit, and the economy will likely sink by a real rate of 3% to 5% of GDP. That is a serious recession. According to the Government, it might look like 0% if they use even more liberal inflation metrics. On the flip side, a smaller deficit should strengthen the dollar from a government spending standpoint. Then there is the question of how long they will persist with Qe given all the other pressures. With the fiscal cliff looming, unemployment will likely rise by at least 1%, and since inflation will be somewhat masked, the Fed will have a free hand to continue monetizing as much as they want because they won't hit their target benchmarks for unemployment or inflation...
The bottom line: taxes are going up for the middle class in various forms. The middle class is going to get squeezed hard. The entire economy will feel it too.
It’s a dangerous cocktail of deflationary and inflationary pressures. It makes things incredibly difficult for small investors; losing some ground feels almost inevitable. If the deficit drops significantly as forecasted, gold might correct below $1,500. Maybe Jim Rogers actually has a point there. Sure, that is still higher than my entry price, but when I account for inflation, I haven't really come out ahead...
Silver could potentially drop below $25 in that scenario. If the ratio falls below 60, or especially if it climbs above 65, I’m buying. Looking at a 7-10 year horizon, I don't see precious metal prices being significantly lower in terms of these volatile currencies. Eventually, they'll be begging for more stimulus and more money printing. I won't even get started on healthcare and pension costs. Those two alone drive the deficit, not to mention defense spending, which most Republicans refuse to touch.
We ought to be cutting and taxing aggressively to protect the dollar's long-term value. This is serious, but it isn't enough. It is impossible to meet all current obligations and debts using today's purchasing power of the dollar...
However, if they want to stretch things out and temporarily blunt the loss of purchasing power, they can. That might mean gold loses its momentum to break above $2,000 in the near term... When calculating gold's trajectory, you absolutely have to factor in Europe. Deflationary pressures and austerity have been brutal. Greece, Italy, and France are slashing spending, and Spain is doing something similar; they are all struggling with official unemployment rates north of 25%. Right now, it doesn't look like gold is headed much higher. The only exception is if the crisis deepens and tax revenues tank, making deficits larger and the need for printing even greater. I doubt they'll allow the contraction to exceed 5% in either the US or Europe; they'll aim for a mix...
It is also anyone's guess how the market will react to an announced US downgrade if no deal is reached. Gold might be viewed as a safe haven, but I wouldn't bet the farm on it. It is more likely that stocks will take a hit since they are sitting at very high levels, especially in the US, while the dollar should strengthen regardless of what the agencies say. Logic dictates that, though predicting the short-term movement in this mix is tough. As I mentioned, logic doesn't always apply to this market.
Of course, all this speculation becomes moot if Washington actually reaches a deal. Otherwise, Obama will have a hard time explaining to his middle-class constituents why so many taxes are being hiked. But then again, who cares when he doesn't have to face reelection...😉

Interesting take on things from Robert Vaughn10... looking at the big picture with plenty of data points, staying cautious, keeping emotions out of it, and leaving enough room for doubt no matter what happens! 👍

darksurfer37 said:I think you already mentioned those November/December numbers—at least from what I managed to gather while reading through everything. By the time March rolls around, the target for May or June will probably still be sitting right in that 1870-1880 range, I guess.

Breaking out of this consolidation takes time. You can't just call the exact moment it happens. 1800 has become a major psychological level; we might see it stall at 1800 again in February or March. Back at the start of the year when we were at 1520, I mentioned we’d need at least a year and a half of consolidation following a correction like that.

Is nobody going to talk about the fact that the Federal Reserve's license expired last night?!

This news might be a little dated, but the principle remains the same. Siphoning off profits through paper assets on both sides—to manufacture a false sense of stability while simultaneously encouraging everyday Americans to dump their gold at buyback stations—comes with a heavy long-term price tag...

http://www.google.com/url?sa=t&rct=j&...4zf9cYqHw2H8JQ

Looking at a 5 to 10-year horizon, it’s going to be incredibly difficult to prevent prices from climbing much higher than what we're seeing now.

I was just reading this earlier today, and it looks like Timothy Geithner warned leaders in Washington, D.C. that the US national debt is set to hit that $16.4 trillion ceiling by New Year's Eve 2012, which is basically the legal limit allowed by our laws. He mentioned he’s going to try his best to prevent a total standstill where the government can't borrow or pay its bills by using some “extraordinary accounting measures.”

I've been thinking about this while sipping my morning coffee, and I'm curious what you all think—is this actually a good sign or should we be worried? 😁

We’re looking at a $600 billion fiscal cliff. Even the Democratic leader in the Senate is sounding the alarm on this one.
Solutions might be hammered out over the next few months, though it remains to be seen if Republicans will agree to any middle-class tax cuts once those increases kick in on January 1st...
This fiscal cliff involves a laundry list of tax hikes, including property taxes. It's the same old symptom everywhere: raising taxes on everyone—even those with minimal assets—just to pad the treasury. I doubt it'll be enough; the long-term unfounded liabilities are simply too massive. However, if we do fall off this cliff, there is a slight chance that inflation might actually stay somewhat subdued for the next three years.
Predicting anything beyond that is difficult. But, if they were to scrap Obamacare, trim pensions slightly, or force foreign investors to take a haircut on bond payouts, the game could potentially continue for quite a while...
That move could send gold into a correction, making it less popular. We might see more paper losses in the near term. If that scenario plays out, I'll be waiting for a dip in gold—and especially silver, which could drop quite deeply. During a recession, the gold-to-silver ratio tends to rise, meaning silver ends up being the undervalued play...
That said, the ratio would need to hit at least 65 before I consider entering the market. This tightening is serious, but likely insufficient given the scale of unfounded liabilities and the reality that the credit pipes will eventually have to be opened again. A good comparison for these austerity measures is Europe. In Greece, they saw wage cuts of up to 30%; in Italy, Mario Monti introduced a tax on primary residences that the current left-leaning leadership is now trying to roll back. The French are doing similar cuts, and their proposal for a 75% tax on the wealthy is particularly wild. It's common knowledge that cumulative taxes can swallow over half of one's wealth, but seeing a single tax rate hit 75% is something I haven't encountered yet.
Summing it all up, there is a clear global trend toward taxing citizens more heavily and stripping away rights, all in an attempt to stave off high inflation for a little while longer. Angela Merkel made it clear: "Europeans should expect a lot of hard work and sweat." This is the current trend, which makes a significant surge in gold in the immediate future seem less likely. Still, I remain moderately optimistic on a 5-10 year horizon because precious metals represent real money, not just a hollow promise of purchasing power that can't be kept. Not to mention, monetary inflation is still far too high. Personally, I've grown tired of seeing silver up about 50% and gold up 25%; it's hard to call them bad investments, but perhaps they aren't quite as stellar as I originally thought.

Robert Vaughn10 said:We’re looking at a $600 billion fiscal cliff. Even the Democratic leader in the Senate is sounding the alarm on this one.
Solutions might be hammered out over the next few months, though it remains to be seen if Republicans will agree to any middle-class tax cuts once those increases kick in on January 1st...
This fiscal cliff involves a laundry list of tax hikes, including property taxes. It's the same old symptom everywhere: raising taxes on everyone—even those with minimal assets—just to pad the treasury. I doubt it'll be enough; the long-term unfounded liabilities are simply too massive. However, if we do fall off this cliff, there is a slight chance that inflation might actually stay somewhat subdued for the next three years.
Predicting anything beyond that is difficult. But, if they were to scrap Obamacare, trim pensions slightly, or force foreign investors to take a haircut on bond payouts, the game could potentially continue for quite a while...
That move could send gold into a correction, making it less popular. We might see more paper losses in the near term. If that scenario plays out, I'll be waiting for a dip in gold—and especially silver, which could drop quite deeply. During a recession, the gold-to-silver ratio tends to rise, meaning silver ends up being the undervalued play...
That said, the ratio would need to hit at least 65 before I consider entering the market. This tightening is serious, but likely insufficient given the scale of unfounded liabilities and the reality that the credit pipes will eventually have to be opened again. A good comparison for these austerity measures is Europe. In Greece, they saw wage cuts of up to 30%; in Italy, Mario Monti introduced a tax on primary residences that the current left-leaning leadership is now trying to roll back. The French are doing similar cuts, and their proposal for a 75% tax on the wealthy is particularly wild. It's common knowledge that cumulative taxes can swallow over half of one's wealth, but seeing a single tax rate hit 75% is something I haven't encountered yet.
Summing it all up, there is a clear global trend toward taxing citizens more heavily and stripping away rights, all in an attempt to stave off high inflation for a little while longer. Angela Merkel made it clear: "Europeans should expect a lot of hard work and sweat." This is the current trend, which makes a significant surge in gold in the immediate future seem less likely. Still, I remain moderately optimistic on a 5-10 year horizon because precious metals represent real money, not just a hollow promise of purchasing power that can't be kept. Not to mention, monetary inflation is still far too high. Personally, I've grown tired of seeing silver up about 50% and gold up 25%; it's hard to call them bad investments, but perhaps they aren't quite as stellar as I originally thought.

😲

Robert Vaughn10 said:How does the fiscal cliff look to everyone right now? Under the most optimistic forecasts, we might cut the deficit in half—down to about $550 billion—which would shave roughly 3% off the GDP. The same analysts predicted a 4% growth rate for 2014, which seems unrealistic once you factor in actual inflation. In my view, you need to add at least 1-2% to those GDP numbers and another $100 billion to the deficit, bringing it to $650 billion. That’s still a massive deficit, and the economy will likely sink by a real rate of 3% to 5% of GDP. That is a serious recession. According to the Government, it might look like 0% if they use even more liberal inflation metrics. On the flip side, a smaller deficit should strengthen the dollar from a government spending standpoint. Then there is the question of how long they will persist with Qe given all the other pressures. With the fiscal cliff looming, unemployment will likely rise by at least 1%, and since inflation will be somewhat masked, the Fed will have a free hand to continue monetizing as much as they want because they won't hit their target benchmarks for unemployment or inflation...
The bottom line: taxes are going up for the middle class in various forms. The middle class is going to get squeezed hard. The entire economy will feel it too.
It’s a dangerous cocktail of deflationary and inflationary pressures. It makes things incredibly difficult for small investors; losing some ground feels almost inevitable. If the deficit drops significantly as forecasted, gold might correct below $1,500. Maybe Jim Rogers actually has a point there. Sure, that is still higher than my entry price, but when I account for inflation, I haven't really come out ahead...
Silver could potentially drop below $25 in that scenario. If the ratio falls below 60, or especially if it climbs above 65, I’m buying. Looking at a 7-10 year horizon, I don't see precious metal prices being significantly lower in terms of these volatile currencies. Eventually, they'll be begging for more stimulus and more money printing. I won't even get started on healthcare and pension costs. Those two alone drive the deficit, not to mention defense spending, which most Republicans refuse to touch.
We ought to be cutting and taxing aggressively to protect the dollar's long-term value. This is serious, but it isn't enough. It is impossible to meet all current obligations and debts using today's purchasing power of the dollar...
However, if they want to stretch things out and temporarily blunt the loss of purchasing power, they can. That might mean gold loses its momentum to break above $2,000 in the near term... When calculating gold's trajectory, you absolutely have to factor in Europe. Deflationary pressures and austerity have been brutal. Greece, Italy, and France are slashing spending, and Spain is doing something similar; they are all struggling with official unemployment rates north of 25%. Right now, it doesn't look like gold is headed much higher. The only exception is if the crisis deepens and tax revenues tank, making deficits larger and the need for printing even greater. I doubt they'll allow the contraction to exceed 5% in either the US or Europe; they'll aim for a mix...
It is also anyone's guess how the market will react to an announced US downgrade if no deal is reached. Gold might be viewed as a safe haven, but I wouldn't bet the farm on it. It is more likely that stocks will take a hit since they are sitting at very high levels, especially in the US, while the dollar should strengthen regardless of what the agencies say. Logic dictates that, though predicting the short-term movement in this mix is tough. As I mentioned, logic doesn't always apply to this market.
Of course, all this speculation becomes moot if Washington actually reaches a deal. Otherwise, Obama will have a hard time explaining to his middle-class constituents why so many taxes are being hiked. But then again, who cares when he doesn't have to face reelection...😉

🙂👍

This whole "tax the rich" thing... We all know it's just pure demagoguery. Total nonsense.
Like what? Rich people just stash cash under their mattresses!? That capital is always being invested somewhere, and society always gets a slice of the action... They spend it on dinner, and suddenly restaurants and their suppliers get a boost, and that cash flows right back into the economy... They put it in funds, those funds invest it... they park it in a bank, and the bank lends it out through loans!
The people running today's welfare states really think they can manage money better than the people who actually earned it... Given the current deficit levels, anyone can see how they're handling things.

By hiking taxes even more, money velocity is just going to tank (M2 is at an all-time low, M1 is looking like it's stuck in the late 70s or mid-90s)... There'll be less liquid cash available, and the people who do have it will just keep lending it to the government... We're looking at another deflationary year... and regardless of the fiscal cliff situation, the world is heading for another recession. Whether basic prices spike in that scenario depends entirely on oil, taxes, and the dollar!
The Federal Reserve printing presses slowed down a bit after four weeks of work, and the Fed decided to shed some assets... All in all, despite all the hype about Quantitative Easing's impact, the balance sheet is still lower than it was in February...

In 2013, the S&P 500 won't see any massive rallies unless there's a tectonic shift in Federal Reserve policy (and considering Ben's term is winding down, I'm not holding my breath)... I don't see a major crash happening either, because there just isn't much reason for one... Most likely, everything stays within the 2012 ranges, maybe +/- 10%... Not bad, considering the uncertainty...

Patrick Moore3 said:This whole "tax the rich" thing... We all know it's just pure demagoguery. Total nonsense.
Like what? Rich people just stash cash under their mattresses!? That capital is always being invested somewhere, and society always gets a slice of the action... They spend it on dinner, and suddenly restaurants and their suppliers get a boost, and that cash flows right back into the economy... They put it in funds, those funds invest it... they park it in a bank, and the bank lends it out through loans!
The people running today's welfare states really think they can manage money better than the people who actually earned it... Given the current deficit levels, anyone can see how they're handling things.

By hiking taxes even more, money velocity is just going to tank (M2 is at an all-time low, M1 is looking like it's stuck in the late 70s or mid-90s)... There'll be less liquid cash available, and the people who do have it will just keep lending it to the government... We're looking at another deflationary year... and regardless of the fiscal cliff situation, the world is heading for another recession. Whether basic prices spike in that scenario depends entirely on oil, taxes, and the dollar!
The Federal Reserve printing presses slowed down a bit after four weeks of work, and the Fed decided to shed some assets... All in all, despite all the hype about Quantitative Easing's impact, the balance sheet is still lower than it was in February...

In 2013, the S&P 500 won't see any massive rallies unless there's a tectonic shift in Federal Reserve policy (and considering Ben's term is winding down, I'm not holding my breath)... I don't see a major crash happening either, because there just isn't much reason for one... Most likely, everything stays within the 2012 ranges, maybe +/- 10%... Not bad, considering the uncertainty...

Spot on. You aren't screwing over the rich. And who's actually doing the screwing? Corrupt, incompetent, and dishonest politicians. Take real estate, for example. How many people in the US actually know about 1031 exchanges?
As for the Fed's balance sheet, I'm staying out of that one. 🙂
Honestly, I also think gold has already left the atmosphere past $2000. Silver is going to go even higher.
What I really don't get, though, since both of them are essentially money... 😂

I still hold the view that metallurgy prices are tied directly to the outcome of the negotiations regarding the fiscal cliff and the debt ceiling. If the stimulus measures expire, the deficit shrinks—putting downward pressure on gold. However, if they reach an agreement and any reduction in stimulus is merely symbolic, we’ll likely see a rally heading into 2013.
We also need to factor in the latest Q3 GDP growth report showing 3.1% expansion—which suggests the economy might actually be returning to a state of normalcy.🤣.......
The whole situation feels a bit reminiscent of 1936/1937, when monetary policy was tightened far too early, leaving everyone to suffer the consequences.😍

The Federal Reserve's (static) balance sheet is the primary driver behind gold's stagnation right now. We'll have to wait and see how that unfolds—it's going to heavily influence precious metals. The big question remains: will the Fed be forced to intervene, or not?

Still waiting for gold to take that final dip toward the $1,610–$1,625 range. Probably happening next week, or maybe the one after (Jan 7–11).

By the end of 2013, I’m calling gold north of $2,000.

Where gold goes next year? Impossible to say until this fiscal standoff reaches a resolution. If the deficit drops below $600 billion—which is the absolute "best-case scenario"—gold won't move much, maybe even pull back slightly. But if the deficit sits at $1.1 trillion, gold will have to break past $2,000. Right now, the most likely play is that nothing gets resolved, leading to automatic tax hikes and budget cuts. This could drag on for a while, making it difficult for gold to rally. Meanwhile, the dollar would likely strengthen.
The only thing that might flip the script is a potential credit downgrade if they fail to reach a deal. A downgrade *might* spark a gold rally, but that’s a big "maybe." It remains to be seen. Honestly, it looks like these people aren't even pretending to work hard to prevent tax increases for the middle class; there isn't even any serious negotiation happening. I also find that obaminites' proposals, while far from perfect, sound more rational regarding middle-class taxes. On the other hand, I find myself closer to the Republicans regarding their spending on everything under the sun, though I think they are wildly off base concerning defense costs. Personally, I’m betting on a stalemate where no deal is reached, the middle class gets hit, and the agony continues—this time in the form of an official recession. Regardless of the outcome, the USA will continue exporting paper, aka inflation, because the balance of payments deficit persists in both scenarios. Parallel to that, Asians will continue to accumulate gold as a hedge...

Feels like a breakout to $670 is coming...

Word is they’ve reached a preliminary agreement regarding the fiscal cliff... though I suspect negotiations over specific spending cuts will drag on—as usual.

Here is how gold is reacting to the news:
http://www.kitco.com/charts/popup/au24hr3day.html