Barry Ritholtz says Gold to Drop 20%-30% next year

[pianodoctor]

Re: Barry Ritholtz says Gold to Drop 20%-30% next year

Ritholtz is smart but he seems to be thinking that $US value (and thus gold) is determined by the free market rather than what we as iTulipers think (at least those of us who read EJ's analysis)- that the $ is being stealthily managed downward (hopefully in a controlled manner) by our central economic planners and will continue to be so for some time yet. (Spikes and dips along the way, of course)

This is an instance where I think one should read everything EJ has written on the dollar/gold/Fed and then review everything Ritholtz has written on the same subject and decide who you think knows more about the subject. Because not a day goes by where some smart sounding guy with plausible arguments isn't gold bashing. But there's a difference between being smart and understanding based on study and research what Central Economic Planning is doing.

It seems that if one can be easily spooked by Ritholtz on this subject, that one hasn't read what EJ has written on this subject. And if one isn't reading EJ, what is the point of paying a membership fee? That's what we're paying for here- EJ's analysis.

[metalman]

Re: Barry Ritholtz says Gold to Drop 20%-30% next year

Barry is by far and away the most accurate of prognosticators. He saw the melt down and he called the short term bottom. Ignore him at your peril.

He does say some dumb things now and then, but don't we all..

agree... he's good at short term forecasts... ej at long term.

[jk]

Re: Barry Ritholtz says Gold to Drop 20%-30% next year

if you look back at the 1970's, gold lost 50% at one point, on its way from 35 to 800. ritholtz could be right for next year, and it wouldn't change or challenge ej's long term forecast.

[GRG55]

Re: Barry Ritholtz says Gold to Drop 20%-30% next year

if you look back at the 1970's, gold lost 50% at one point, on its way from 35 to 800. ritholtz could be right for next year, and it wouldn't change or challenge ej's long term forecast.

I keep wondering if the drop from $1000 to near $700 was "that event" in this cycle...hard to imagine a strong enough US$ from this point forward that would tank gold by 50%, especially on a day when oil is up $2+ [but as always anything is possible in this crazy world...]

[Jay]

Re: Barry Ritholtz says Gold to Drop 20%-30% next year

If gold goes down more, I'm going to buy more. If it goes up more, I'm going to buy more.

[Bruno T]

Re: Barry Ritholtz says Gold to Drop 20%-30% next year

Most of these guys are all the same. They will make some "bold" prediction of a price drop/increase. When said prediction doesn't pan out they will pretend it never happened. They know that unless they post their mistake for all to see it will quickly be forgotton by most. When they get one right (a 50/50 chance) they will trumpet it and paste evidence of their brillance all over their websites. So their clients are far more likely to "think" they are brillant than to actually know their track record.

They use weasel words such as "I wouldn't be surprised to see....." and "prices may rise up to...." so that they are never techically "wrong". Call them on it later and they will remind you that they used those weasel words.

Read their reasoning. If you don't buy into that, don't buy into their "predictions". Listening to this guy he omits huge important issues like massive deficit spending that will make dollars less valuable, guaranteed. That leaves me suspicious of his acumen. He also throws in the strawman argument that people are only buying out of fear of total collapse in social order. Puhleese.

And with this guy, you gotta love the "2010" time frame he gives for a drop of 20-30%. For example, if it drops 20% in July or in January is a huge difference. What if it rises to $1350 from today's price and then falls to $840 in the first half of the year, then rises to $1650 after that? He will have been technically correct. It did fall 20% or so. But what should you have done with that information? When do you sell or buy? If you sold today and didn't buy back in nearer the 'bottom', you'd lose. All he's really saying is "gold can be volatile in price". Wow, thanks for that, wizard.

Any of these investors who confidently claim to know what's going to happen in a few month's time (short term) who aren't multi-billionaires can safely be ignored.

And only an arrogant jerk living the high life crunching numbers who is totally out of touch could call this a "mild recession". That tells me the guy has no clue.

[thisandthat.nowandth]

Re: Barry Ritholtz says Gold to Drop 20%-30% next year

searched around & can't find a 2008 gold prediction from barry for 2009, up or down. noticed that he & mish turned up on the fire economy network... yahoo finance... with ben stein, robert kiyosaki & the other fire pitchmen & scammers...

Bit OT here , but as a pro-metalman lurker , I thought you might enjoy this amazing offer from Kiyosaki. Imagine...a 1oz Silver Medallion (see generic round) for only $65, plus shipping, and tax.

http://www.richdad.com/RichDad/RichContent.aspx?cpid=96

[Crazyfingers]

Re: Barry Ritholtz says Gold to Drop 20%-30% next year

Most of these guys are all the same. They will make some "bold" prediction of a price drop/increase. When said prediction doesn't pan out they will pretend it never happened. They know that unless they post their mistake for all to see it will quickly be forgotton by most. When they get one right (a 50/50 chance) they will trumpet it and paste evidence of their brillance all over their websites. So their clients are far more likely to "think" they are brillant than to actually know their track record.

They use weasel words such as "I wouldn't be surprised to see....." and "prices may rise up to...." so that they are never techically "wrong". Call them on it later and they will remind you that they used those weasel words.



Any of these investors who confidently claim to know what's going to happen in a few month's time (short term) who aren't multi-billionaires can safely be ignored.

Does this include EJ?

[santafe2]

Re: Barry Ritholtz says Gold to Drop 20%-30% next year

"It's clear the great recession is over!," says Barry Ritholtz...

Not because we'll see a robust recovery, rather, because we’ll see more of the same; an economy characterized by weak employment, weak housing and the continuation of what he describes as a mild recession.

Gold, like the stock market is following monetary liquidity which is up massively. While monetary growth is off from it's highs, it's still near historic highs. Gold may continue down from here but as Fred pointed out, 30% is just a normal retrace from the run-up. It will be a buying opportunity. As I've noted before, I've been selling. Seven hundred seems very low to me given current circumstances.

He's betting on a rebound for the dollar. "No one is expecting a rally in the dollar," he proclaims, and that's exactly why he "wouldn't be surprised to see the dollar rally 30-40% from here."

If "from here" means 30-40% up from here in the 77-78 range, that's just dumb.

A stronger dollar will be a headwind for stocks and "terrible for oil, terrible for gold," he says. Ritholtz predicts gold will pull back "20-30%" next year. Unlike many of the gold bugs, he doesn't think "the world is ending" and doesn't predict any social panic that would lead to a spike in gold prices.

He's got most of this wrong. The "stronger dollar" is a short term head fake. Simply a rebound within a 25 year bear market and that bear market is not over. Gold may go down to $800-$850 but that's only an excellent buying opportunity. This cycle is not over.

[due_indigence]

Re: Barry Ritholtz says Gold to Drop 20%-30% next year

I agree. There is too often an empirical veneer applied to what really is a completely obscured horizon. The clouds on the horizon are formed by imponderable complexity. Of course the allure is that you're working in what's essentially a binary outcome (the market-in-question will go UP or it will go DOWN.) Loverly! Let's start a newsletter!

Some opt out of the white lab-coat approach altogether and adopt a more witch doctor/guru schtick. This tactic has been working since at least the time of the Delphic oracle. I know an extremely smart guy who goes to Atlantic City and swears you get 'hot' blackjack tables. He has a PhD in a quantitative science and yet part of his brain is still open to the entrails of chickens. This is peculiarly HUMAN. Bernie magically delivered consistent double-digit reurns. Hard-bitten businessmen were utterly spellbound. Go figur.

The list of exogenous events (meteors et al) is endless. And let's give the exhausted black swan a rest this holiday weekend, shall we?

[phirang]

Re: Barry Ritholtz says Gold to Drop 20%-30% next year

I keep wondering if the drop from $1000 to near $700 was "that event" in this cycle...hard to imagine a strong enough US$ from this point forward that would tank gold by 50%, especially on a day when oil is up $2+ [but as always anything is possible in this crazy world...]

Let's ask Ben's thesis adviser :

NEW YORK - Bank of Israel Governor Stanley Fischer said yesterday the world has to accept a weaker U.S. dollar in order to ensure the global economy recovers soundly.

"We also have to realize, what is hard to get across, there has to be a global rebalancing. Either the U.S. runs a very long period of recession, which is a really bad idea, or the dollar has to weaken, so that balance of payments can be straightened out," Fischer said in response to a question during a business breakfast in New York.
"So we have got to accept, as do other people, there has to be appreciation vis-a-vis the American dollar. Most people have kind of accepted that. It is just that when it gets out of line that people get nervous," he said.

The shekel has recently strengthened against the U.S. dollar, trading at around NIS 3.7750 per greenback. In October it hit its best levels in 10 months, trading as strong as NI 3.67 per dollar. In the August through October period the central was intervening heavily in order to stop the shekel from appreciating rapidly against the greenback which would give relief to Israeli exports.

The U.S. dollar index, which measures the greenback against a basket of major trading-partner currencies, has fallen roughly 16.75% since it peaked in early March of this year when global markets hit bottom and investors were seeking a safe haven.

Fischer acknowledged the strong economic connection with the United States and its importance for the global economy, but cautioned that heavily export-oriented countries have to move away from relying on the United States to buy their goods and services. "So I think we've all got to accept the fact that the dollar is likely to be weaker and our currencies relative to the dollar are going to be stronger. The U.S. has to reduce its imports ... or we won't get a prosperous global economy," he said.

"You have at one end the Chinese just not budging. At the other end the Brazilians have massive appreciation ... trying to use capital controls and various things," he said in reference to measures put in place to limit the real's rise.

On the issue of inflation, which he reiterated is likely to rise above the current top end of its 1-3% target in the coming months, Fischer said he would not buy gold.

As recently as Nov. 23, the central bank increased its key lending rate by a quarter of a percentage point to 1%, a level it said was still "accommodative" and would support further economic recovery. Still, given the rising inflation pressures, he said he was not interested in making a move similar to that of India's central bank, which spent $6.7 billion in early November to buy 200 tons of gold from the IMF.

Spot gold prices touched another record high yesterday, rising to $1,226.10 before slipping back to $1,214.

"If you really think that the future is high inflation in the world economy then you hold gold. I don't think that is the future. I don't see us in a high inflation environment. Without committing, I don't think we are going into gold any time soon," he said.

http://www.haaretz.com/hasen/spages/1132654.html

[FRED]

Barry Ritholtz 20%-30% Gold correction off to a slow start

Barry's forecast for gold to fall 20% to 30% from $1100 in 2010 is off to a slow start.

[pwcmba]

Re: Barry Ritholtz says Gold to Drop 20%-30% next year

I really wouldn't mind another sell off like this forecast to load the boat but I think the golden boat is already sailing.:p

[sishya]

Re: Barry Ritholtz says Gold to Drop 20%-30% next year

Bumping this thread - if any one has any comments.


Even Barry was wrong here. No - Gold did not go to $800, but is galloping the other direction.
Gold is still not out of the woods, but it looks like it knows it's path in the woods.
He was right about Dollar Index going up. but it was primarily against EUR, not against third world currencies.

I guess the traders who were short Gold, got shot in the woods. I was a buyer in recent Gold dip.

[sishya]

Re: Barry Ritholtz 20%-30% Gold correction off to a slow start

Fred : Why is your posting date showing Jan 6th 2010 when the kitco chart shows May 11, 2010 ?

OK, nevermind, maybe you embedded Kitco chart, but actually posted in Jan 2010