What ever happend to $2000/oz gold?

[jtabeb]

Well, apparently MSN has it all figured out.

(No I don't agree with the conclusions, but you have to admit that the humor you gain from reading these pieces get better and better!)

But I do seriously have to ask if our country is going through it's own "Baghdad Bob" moment.

http://articles.moneycentral.msn.com...2000-gold.aspx

What happened to $2,000 gold?

Not so long ago, the price of gold was soaring, and analysts predicted $2,000 an ounce was imminent. What stopped gold's rise? Will it take off again?


By Anthony MirhaydariThroughout all the tumult of the past 10 years -- the bubbles, the recessions, the wars, the bank failures and the bailouts -- one asset class has outshone all others:
Gold.
Best ways to buy gold

From a low of $255 an ounce in the heady days of early 2001, gold now sits above $1,100, a climb of nearly 340%. It moved above $1,000 for the first time in early 2008, and it hit a peak of $1,226 in November 2009 as worries over the debt crisis in Dubai reached fever pitch and the Reserve Bank of India purchased a large block of gold from the International Monetary Fund.Along the way, analysts breathlessly proclaimed that $2,000 gold was just around the corner.
It didn't happen.

• Find a good precious-metals ETF

Instead, gold started to lose its shine as a global economic recovery gained traction. Since U.S. stocks hit their low March 9, 2009, gold has underperformed the most unglamorous of all metals: Lead has gained 74% while gold is up just 21%.
So, what went wrong? And is $2,000 gold still a possibility?
Metallic, not magical

Quite simply, despite its charm and legendary allure, gold isn't immune to the laws of supply and demand. Because the metal has limited industrial use, generates no cash flow as an investment and has very price-sensitive end users in the jewelry market, gold's value depends on the swing factor of investor demand.

Hedge funds bailing out of gold?


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And that is tied to gold's status as a "safe haven" asset that won't lose value to inflation the way paper currency does -- and that will still have value should economic Armageddon make credit cards and dollar bills worth as little as the plastic and linen they're made from.And, boy, did investor demand swing: According to Credit Suisse estimates, demand for gold nearly doubled between 2007 and 2009 as the credit crisis went critical and the global economy tipped into the worst recession since the 1930s. That sent gold prices climbing...


And in other news, Chocolate Rations are going up by 25 Grams per Week!!!!

[Mega]

Re: What ever happend to $2000/oz gold?

We see What EJ has to say, but i think its coming.
Mike

[thriftyandboringinohio]

Re: What ever happend to $2000/oz gold?



Time seems to be on gold's side.

[jtabeb]

Re: What ever happend to $2000/oz gold?

Time seems to be on gold's side.

Boy, that almost looks like a parabolic curve, does it not?

[globaleconomicollaps]

Re: What ever happend to $2000/oz gold?

Boy, that almost looks like a parabolic curve, does it not?

what generally happens to parabolic curves like that?

-G

[Fiat Currency]

Re: What ever happend to $2000/oz gold?

what generally happens to parabolic curves like that?

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[globaleconomicollaps]

Re: What ever happend to $2000/oz gold?

Today the euro made a huge move down to 1.33





Gold also moved down slightly. I'm trying to remember why I bought gold. Wasn't it supposed to go up when currencies became unstable? I remember thinking that I was finding a safe haven against defaulting governments. About how much can we expect Gold to drop if Greece declares bankruptcy? Spain? what about the US? I'm thinking about $250 per default with a big $500 drop for US default on the 30 year bond. What do you say?

[jimmygu3]

Re: What ever happend to $2000/oz gold?

About how much can we expect Gold to drop if Greece declares bankruptcy? Spain? what about the US? I'm thinking about $250 per default with a big $500 drop for US default on the 30 year bond. What do you say?

I say I hope you're joking.

Defaults hurt the currencies of the defaulting governments. A foreign default, although it it shakes up the whole system, is dollar-positive. When you are denominating your hard assets in dollars, that means their prices go down in dollars. On the other hand, in the case of a US default, gold would go to the moon in dollar terms, as debt-backed dollars would no longer have buyers, and a mad rush to redeem dollars for assets would ensue.

-Jimmy

[globaleconomicollaps]

Re: What ever happend to $2000/oz gold?

I say I hope you're joking.

Defaults hurt the currencies of the defaulting governments. A foreign default, although it it shakes up the whole system, is dollar-positive. When you are denominating your hard assets in dollars, that means their prices go down in dollars. On the other hand, in the case of a US default, gold would go to the moon in dollar terms, as debt-backed dollars would no longer have buyers, and a mad rush to redeem dollars for assets would ensue.

-Jimmy

So, In effect you have a domino theory of world default. If I can extrapolate a little, it goes like this:
1) Greece defaults, leading to Europeans dumping euros ( and gold ), for US treasuries ( stocks, housing or anything in US dollars ).
2) Portugal, Spain , Italy etc default and gold goes down further ( how far? down to $900 ? $600 ? )
3) US defaults. Gold goes from 800 to $2000 in one week ( day, hour, second )

Is this what you had in mind? If not why not? Didn't we see something like this with Iceland? What happened to gold when Bear-Stearns took a dive? Lehman? If you don't recall I will refresh your memory, as I had decided to dip my toe in about the time that bear stearns did the swan dive. Gold dropped $100 . I was of the opinion that the collapse of a major wall street bank would lead to a sharp jump in safe haven buying of gold.

[photoncounter]

Re: What ever happend to $2000/oz gold?

About how much can we expect Gold to drop if Greece declares bankruptcy? Spain? what about the US? I'm thinking about $250 per default with a big $500 drop for US default on the 30 year bond. What do you say?

That would be awesome ! Me buy more

[Fiat Currency]

Re: What ever happend to $2000/oz gold?

.... What do you say?

I say the key thing to remember here is - that this is a global process not an event.

While things may seem to be moving slowly for those of us with knowledge and the wisdom of history, from a future historical perspective these events will have been deemed to have happened quite quickly.

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[jpatter666]

Re: What ever happend to $2000/oz gold?

So, In effect you have a domino theory of world default. If I can extrapolate a little, it goes like this:
1) Greece defaults, leading to Europeans dumping euros ( and gold ), for US treasuries ( stocks, housing or anything in US dollars ).
2) Portugal, Spain , Italy etc default and gold goes down further ( how far? down to $900 ? $600 ? )
3) US defaults. Gold goes from 800 to $2000 in one week ( day, hour, second )

Is this what you had in mind? If not why not? Didn't we see something like this with Iceland? What happened to gold when Bear-Stearns took a dive? Lehman? If you don't recall I will refresh your memory, as I had decided to dip my toe in about the time that bear stearns did the swan dive. Gold dropped $100 . I was of the opinion that the collapse of a major wall street bank would lead to a sharp jump in safe haven buying of gold.

Yes, that's about it. If you lived in the Eurozone, you're *really* happy with your gold.

As stupid as it sounds, even though the US is probably the worst currency offender, it will likely fall last, and thus it will perversely do best against gold until the end.

Now, that's *not* guaranteed which is why I've some gold as a hedge, but it does explain why I haven't gone JTABEB (yet).

Personally I think there still could be some serious downdrafts in gold yet to come. I do *not* underestimate TPTB to engineer at least one more attempt to force gold down. Perhaps a coordinated CB selling of gold to wipe out the speculators and buy more time.

[ASH]

Re: What ever happend to $2000/oz gold?

So, In effect you have a domino theory of world default. If I can extrapolate a little, it goes like this:
1) Greece defaults, leading to Europeans dumping euros ( and gold ), for US treasuries ( stocks, housing or anything in US dollars ).
2) Portugal, Spain , Italy etc default and gold goes down further ( how far? down to $900 ? $600 ? )

Is this what you had in mind?

Something like this is what I think is most likely to happen, but by no means certain.

I think we see sovereign debt crises in other countries BEFORE a US dollar crisis. I think sovereign debt crises outside the US are dollar-positive, and will turn out to temporarily lower the price of gold in US dollars. The other financial shocks which I think most likely in the near term, such as a stock market correction, are also in this direction.

I'm holding onto my physical PM, but went to cash from my former paper PM position. I don't feel strong conviction about this trade; I'm just playing a 'hunch'. I'll abandon that hunch as events and indicators warrant.

My view is that macroeconomic analysis often gets the timing wrong (by being early), but seldom mis-identifies problems. My working hypothesis is that the basic macro analysis that was current on iTulip through 2009 isn't wrong about the direction of markets and the economy, although the estimated timing of market events has been off.

[pwcmba]

Re: What ever happend to $2000/oz gold?

Maybe it will be €2,000 first! I really hope so - I'm working on possibly moving to Europe.

[FRED]

Re: What ever happend to $2000/oz gold?

See: Lessons of the American Lost Decade – Part 1: The gold bugs were right - Eric Janszen