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Sunday, November 29, 2009

Famous Last Words

Over the last few months gold has defied the pundits and newsletter writers by not delivering a much predicted pull back and is now racing ahead stopping just shy of $1200 on Friday.

This massive rise has sparked many commentators to predict that we will never see Gold below $1000 ever again. Whilst the fundamentals and some technicals may support this in the long term - these statements smack of euphoria. I am reminded of oil's meteoric rise above $100 up to $149 and how many of the peak oil proponents (many of them also Gold Bugs!!) talked about how we would never see oil under $100 again. Lets see where we end up!!!


Adam Joseph Braus said...

well, the oil price only came down so much because of deflation, the dollar almost doubled in value because it became so scarce during the derivative's bubble collapse. Unless there is Depression era deflation, what would be the causes that could bring the price down? I don't see any, it is only moving towards being the global reserve currency again, which means more central banks will hold it, and as soon as gold hits the floors of central banks, they aren't going to get rid of it any time soon, creating a global pillow, cushioning any downward trend in the commodity. Moreover, it is going to become a haven, along with other psychological commodities (oil and silver) as the Federal Reserve notes that are sitting in the reserves of banks start to come out and multiply, probably surrounding a green bubble that will last a little longer than the dot-com bubble and be chaotic for the economy, but benevolent for the earth, this green bubble might dampen the upward trend in oil, but it won't do the same for gold. I don't see why gold shouldn't be 2400 in two years and never drop below 2000 again.

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