How high can gold prices go
Someone just asked me this question yesterday. My answer was quite simple, I have no clue as of how high gold price will go. The person keep pressing then, asking what would make me sell my gold? With this recent run up and all technical "overbought" indicators, everyone expects gold to sell off. And eventually hit $820 per ounce. I don't know why this figure is so persistent, I hear it over and over again. Probably has something to do with Jon Nadler predicting this price a few months ago and now being incessantly repeated by all those paper holders who because of one reason or another, are so eager to see gold go down, they can't think. And the crowd simply agrees. Same Nadler from Kitco who in 2008 I think was widely quoted that gold can go back top $500s. He is such a pest. How high can gold prices go is rather hard to figure out, there are so many factors that can influence gold moves. You can read Gold, silver prices 2011, 2012 and every other post in our Gold Investing category to get some idea. You can Google it, and still will not find anything credible. That is why I prefer a rather wide range, anywhere from $2,000 to $4,000 within next 3 to 5 years.
Now, would make me sell my gold? I have to see a trend of rising short-term interest rates as well as tightened monetary policies not just by us but the other governments as well because this will encourage long-term rates to rise. Once interest rates increase to a level where they outstrip currency depreciation, you will likely see too many investors selling gold and looking for other things to put cash in. To make it abundantly clear, I think that will be very stupid, but you can not fight a tsunami, even the tsunami of too many idiots.
Now, I really don't think it is going to happen, I mean the interest rates will stay low for quite some time, as I explained in Fed to stop buying mortgages, interest rates, home values and swine flu pandemic written back in January. Raising interest rates is simply going to destroy whatever left from our housing market. Auto sales also would suffer and business lending will get more expensive. And 9 months later, it is even more relevant.
Other things like increased taxation on gold transactions, confiscation and such will certainly ruin gold and other metal markets. I seriously doubt though, things would come to any of those. The Section 9006 of the Patient Protection and Affordable Care Act that would require reporting to the Internal Revenue Service the purchases of all goods and services by small businesses and self-employed people that exceed $600 during a calendar year, will be repealed I believe.
Thu Oct 14, 2010 04:10PM | Copyright: www.bad-credit-advisor.com | More in Gold Investing | Comments (0)
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