Gold investment forecast - predictions for higher prices
Our gold investment forecast stays on course. We recommend you to just buy gold in anticipation of much higher prices. Where these predictions are coming from? Well, such a recommendation is based on a few things, rather ominous I shall add. We will start from pure technical perspective, and I think I have said that here before, it took me a while to realize that charts just basically reflect market mood or sentiment. Putting it in even simpler terms, a chart reflects the number of buyers and number of sellers which fluently translates in demand and supply. When the sellers outnumber buyers, a given stock or a commodity price goes down. Same thing have been happening with real estate. When money and loans were easy and everyone thought housing, not the gold was the best investment, number of home buyers was way higher than numbers of new homes and willing sellers. Then the pendulum swung rather painfully, buyers have disappeared and you know the rest - we are where we are. Before you start laughing at my gold investment forecast and bold predictions of higher prices to come, I urge you to revisit the forecast story I wrote in January 2007, called The housing bubble - why I think real estate bubble is here and going to get uglier. The facts that I am not among Yahoo! financial experts most of whom I ridicule periodically, and I do not write silly books that many of you apparently buy, read and follow, do not deny my common sense approach combined with a little deeper knowledge of history and ongoing events than those of an average Joe. So I can see the picture clearly. You my friends should see the chart below, which I borrowed from Kitco and drew those ugly lines to show the ever higher highs and ever higher lows. And all the chartists out there and those who like bad mouthing gold and gold bugs who occasionally I admit do sound a bit irrational, save your rightful indignation over my rudimentary charting skills and better explain how the gold is in down trend.
Now let us discuss what is going on. I perfectly aware that charts reflect the market sentiment up to the present and things can change in a heart beat. And I think they will and the gold will be a huge beneficiary. You want to know my prediction for gold prices in 2010? Here, I think they will be around $1,350 in June, which is 20 percent increase over current prices. Two or three recent pull backs to $1,040 or $1,070 range were quite normal. How is that for the gold investment forecast?
The fact is gold represent real money, not paper currencies in the world where every developed country has more debt than assets. If you think Europe have problems with economies of Portugal, Ireland, Greece and Spain known as PIGS, consider what California, Michigan and Florida trouble means for U.S. In such an environment, gold becomes the asset every one wants and needs. The 10 year chart below shows red Dow Jones Average relative to blue CBOE Gold Index, which is an equal-dollar weighted index composed of 10 companies involved primarily in gold mining and production, rebalanced after the close of business on expiration Friday on the March quarterly cycle. You can clearly see which investment real money have been going into. The Dow is flat over 10 years while CBOE is up nearly 500% in the same period of time. And if you compare the Dow Jones to the real thing, the Gold Price Index which I was too lazy to overlap with the Dow, the picture becomes even more obvious.
For those of you still looking for gold investment forecast and price predictions, understand that by some estimates which I find quite credible, the money supply rose by 70% in 2008 alone. Starting with Volcker and Greenspan in the 1980s and 90s, and continuing with Bernanke today, we have massive influx of money and increasing prices. And prices are going to skyrocket leading to inflation levels never seen before. The other major point is $1,000 USD resistance level that was successfully broken and rebroken in August / September, now serves as a support, and quite substantial.
China sold $34 billions worth of US government bonds in December, possibly showing it has lost confidence in American economic policy. All the talk that China and other major U.S. debt holders have no alternative to the dollar are simply full of it. The simple fact is that no one knows. While it is true that China needs U.S. consumer to spend buying it cheap stuff, the reality is that more and more Chinese themselves are quite capable of spending money and their number is growing. And even sillier mantra 'what else China is going to do with all the money' has no merit. China has been quite busy buying physical resources including energy and fertilizer, stakes in foreign companies that control their countries oil, natural gas, uranium, coal and metals as well as farm land and yes, the gold. We shall see who is to buy the remaining 190 tons of gold IMF is about to sell, but many are betting on Chinese to step in.
The Euro debacle is pushing dollar higher. The US Dollar Index Future sits today at 80.43. Yet gold is quite content with that. Being the best out of the worst currencies apparently is not that good. The geopolitical situation is also quite beneficial for my predictions. Much higher gold prices are in store if either, Iran announces tomorrow that it got the bomb, or we wake up to the news that Israel attacked it. So here you go, you got several things going for gold. None of them are actually good if you think of it, but even few would make gold investment a slam dunk, never mind all.
Here are two other real estate forecast related stories I wrote in 2007 and 2008, that have proved quite accurate,
Two years into the housing slump and still in a state of denial
The Real Estate, what lies ahead - 2007 and beyond
Sun Feb 28, 2010 01:02PM | Copyright: www.bad-credit-advisor.com | More in Gold Investing | Comments (0)
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