2010 gold price will be vulnerable to downward correction - S&P
In a recent analysis, S&P says copper demand and supply fundamentals remain favorable when compared to other base metals.
Author: Dorothy Kosich
Posted: Monday , 25 Jan 2010
RENO, NV -
Standard & Poor’s has increased its metals price assumption by about 30% this year, citing higher spot and futures prices, “which in most cases have rebounded strongly in recent months.”
S&P analysts have also raised their assumptions for 2011 by about 30% and for 2012 by about 20%.
The analysts raised S&P’s gold price assumption by 13% from $800 per ounce to $900/oz this year. Gold price assumptions were raised by 23% from $650 to $800 for next year and by 12% from $625 to $700 for 2012…
www.mineweb.co.za/mineweb/view/mineweb/en
/page67?oid=96424&sn=Detail&pid=1
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You think that was bad, JUST IN, and even worse…
Beware the 4 new asset bubbles
By Shawn Tully, senior editor at large
January 25, 2010: 12:05 PM ET NEW YORK (Fortune) –
Here we go again
Gold
Investors are rushing to gold, because they rightly fear far higher inflation in the next couple of years and want to hedge against both rising prices and a declining dollar with a commodity that, they claim, has a fixed supply.
Since early 2009, the price has jumped to $1,100 an ounce from $875, triple its average price between 1990 and 2004. Yet the supply of gold is far more fluid than the gold bugs admit, partly because mining companies are investing heavily to increase production.
The real threat: Prices are so high all over the world that people who once treasured their gold jewelry are now rushing to sell it. Swiss refiners are offering irresistible prices for bracelets and brooches, “cash-for-gold” stores are in Chicago malls, and suburbanites are hosting Tupperware-style parties where neighbors show up to hock their gold teeth.
When this happened in the early 1980s with silver, prices plummeted from $50 to $15 in less than a year. Look for gold to end up below $500 an ounce within two years…
money.cnn.com/2010/01/25/news/economy/a
ssets_bubbles.fortune/?section=magazines_fortune
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And you want to know why there is not more excitement out there re gold and silver? None of us need go any further than these articles, and most other gold analysts in the industry, for the answer. It is appalling beyond comprehension. What ticks me off is these know-nothings never get called to the carpet months and years later as to why they were so off target.
Their main problem: they are working with the WRONG supply/demand numbers because they have failed to take into account the ramifications of the gold price suppression scheme. Others, like this Fortune guy, know as much about gold as your average third grader. That’s why this bunch of clueless clowns have been wrong for so long, and then have the audacity to continue to exhibit how little they know with this barrage of garbage.
Someone who does get it is our friend Jim Willie, of Hat Trick Letter note. From his latest yesterday:
During the trend decline or the counter rally for the USDollar, a constant event persists. The London metal inventory is being totally depleted of gold bullion. Fast approaching is the event of GAME OVER for London, a condition that has already reached critical level according to a key reliable source of information with London connections and direct experience there. The paper gold market and the physical gold bullion market have finally separated in a practical manner, meaning actual gold has almost no role anymore in London paper contract settlement. The absence of gold in London requires extraordinary tactics to settle contracts and to obtain gold bullion. Intimidation and bribes accompany gold delivery demands. They have almost zero gold, its supply having been drained in high volumes since early December, a process currently in acceleration. The opportunity to convert fiat money into precious metal weight is closing, at least at prices considered reasonable. The London gold banker said, “There is going on a lot more than meets the eye. The physical system is actually consolidating bigtime and is organizing itself with lightning speed, totally hidden from pretty much anyone, even the so-called insiders. The paper precious metal market and the physical precious metal market have defacto disconnected. The paper and physical gold markets currently operate in parallel universes. The outflow of physical metal from bank vaults is happening at a mind bending pace.” The true gold price might very soon become unknown, an extremely positive development. Gold market disruption leads to chaos, followed by much greater clarity. Like a bankruptcy process, the event is sudden but the cleanup takes weeks as dust settles. Right now, we see strong attempts using naked gold short contracts at the London metals exchange (LBMA) and the COMEX in the United States to drive down the gold price. It is all illegal and permitted. Margin calls have hit, forcing further selling of paper contracts. Before long, no gold metal will be available until clarity and prosecutions begin.
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What Jim is telling us fits right in with my understanding of the gold market. There is a growing, massive physical short position out there which cannot be covered at these too low prices. The longer The Gold Cartel continues their antics, the bigger the default problem in the future.
