The LBMA gold price geniuses said gold would crack $2000 next year end of year. A year away - ok what a great question.
Now that is a great question. What is gold in a year?
Ok so what is my take? Before I give you some calls we made about gold, the USD and other currencies which proved right - in a moment well revisit that.
Um yes gold is more likely than not to crack $2000 in a year from today. To put it in a nutshell. In fact gold might crack $3000 too. So let's middle it and say my call is 55% gold hits $2500 in a year from today. The 45% balance will be gold hitting $1000 first in a huge stock crash, and then followed by a rally back to $1500 in a year.
Ok that's at least a measurable call.
Now, since I don't have all the knowledge of the LBMA geniuses, I reserve the right to change my view any time. But that's a call.
Now why did I make that call? Well, you know the phrase- it's 'a long story'. The Middle East? A wild card. For war or peace. If peace, then gold stays around $1500 to $2000 as it is now. If war gold might hit $3000 before it tanks when the markets tank and take gold back down to a new floor of $1500- whereas the old floor was $1000 to date but that seems long gone now with gold rising in all currencies which are racing to the bottom of competitive devaluations....I told you it's a long story.
Competitive currency devaluations
But the public bailouts have put a floor on gold too, so with the competitive bailouts and currency devaluations at the point of a gun from the world CDS markets which appear frankly to be the only free market left with the exception that the speculators are having a field day and that's terrible - not controlled by the Central banks (their chagrin...)... um
So you got that so far?
Ok...if gold were to hit $3000, the USD would be having some trouble, but nothing major yet. $5000 would catch my attention tho. The Euro would be in the toilet and frankly, I think the Euro is already below par with the USD now, regardless of the 1.35 numbers it's posting. With all the trouble the EU and Euro are in, it should be around .90 to the USD not 1.35 but the majic EU hopes spring eternal. Enough said or do I have to point out the massive geopolitical forces springing on the Euro now, or the Arab/Moslem unrest -IN the EU and not just in the Middle East? Germany is not going to just roll over and indebt their economy (basically barely healthy now at 3% growth while the rest of the world is in deflation and depression). China? India.. The Bricks - well those emerging economies are overblown as is the resource mania. Yes mania -IE just another bubble and maybe the last one. Oops do I hear the gold bugs calling for my head?
Gold is definitely in reality and Silver is speculative as it always was, or didn't you know that?
No because gold is still holding up well but it's not like Silver which is so wild. Gold was never like that, and so is a reserve currency like the USD but a bit over powered and not feasible to make a currency out of, unless u want 200th of a gram notes with a piece of gold leaf in it, which won't work. They will just burn the notes and refine it back into coins. Like it or not with a world economy now 7 or 50 times the size GDP wize compared to 1900 (just look at a few old photos of Shanghai or New York City) it seems you must have electronic money now.
You could try a gold fractional reserve currency, but that won't work anywhere because all the nations have to start devaluing their currencies to even have a hope of not having their economies collapse due to debt deflation- that will last how long? Not too long or else they will have to throw in the towel quickly realizing they are merely competing against each other for a shrinking consumer pie around the world- IE - deflation.
Credit economy was invented around 1920 to date
This debt based world economy that actually predates WW2 - to the US credit bubble in the roughly 1920's onward with the invention of home mortgages - yes those are new to the world around oh 1920 or a bit before - and Henry Ford who invented the assembly line and doubled daily wages in the middle of a cheap oil energy boom- for workers there to all of 5 bucks a day (inflation adjusted multiply by about 10 or 15) and started the consumer world boom which rode on the back of the US economic manufacturing juggernaut that he basically invented in part...
I told you this is a long story. And cheap energy and a green food revolution, and so on. In the last century the world population multiplied by roughly 7 times. Then the US dominated the world economy, Europe exhausted itself in two world wars (resource wars and commerce wars with ideology mixed in -) and never came back to its former glory- and then we can talk about the communists who really are wolves in sheep's clothing and still are very much around -
Did I say this was a long story or do you just want the numbers? Well those are at the beginning of this piece.
Some of Our recent calls - and why they were made...
Well for one thing before we start that discussion, let me say never underestimate the USD. That is lesson number one. Is it depreciating? And faster than ever? Sort of yes. It certainly is about 20 or ten times less valuable than in say 1925.v a sliver dime buys as much now as a dollar did back when (80 yrs. ago roughly, I'm really ball parking that but no one will disagree with me so there or they won't figure out how to disagree with it...).But yeah, the USD has vastly depreciated by about a factor of say 20. Gasoline was about um 20 cents a gallon, now it's between 3 and 4 USD - taxes aside - let's not get into that part.... Just the price ok? But then again people working in a gas station don't make 35 cents an hour either like my dad did as a kid.
So what about our recent calls? Like calling the silver bubble April 25 when we perceived the USD bottomed then. The USD bounced then around 82 on the USDX (US dollar currency basket heavy Euro weighted) and the silver bubble hit near $50 and promptly fell to about $30 to $35 and is now at $40.
Or our latest calls - here are some ringers, and no it's not just advertising, we made some grand calls recently this last week and we'll even say why- hence it's not just promotional is it?
1. On September 17/18 we stated the USD should hold 77 on the USDX before Monday. That happened.
2. Same time we stated gold could have a hard sell off (before Monday) and it's was down due to market jitters and liquidity selling. That happened.
3. We stated silver should hold near $40 it did.
4. We stated copper and base commodities are in bubble land and they will correct hard; they are correcting hard. And so on.
So, If you want some more of this stuff from us at Prudent Squirrel dot Com, well right now the year subscription is $240 and about to go to $360 and I think it's worth every penny of that and more. But we don't want to price people out.
But if you are interested in subscribing, you have a limited time to take advantage of the old price of $240 for now. Later (I have not decided exactly when, it will rise probably to $360, we have discussed raising prices before and we do this every year. We started a long time (6 yrs about) ago at $88 a year).
And one other thing we are following some prophecy here too. Yes we have not forgotten the 2012 questions either.
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Disclaimer: Chris Laird is not an investment advisor/professional. This article, and the PrudentSquirrel newsletter and alerts, are general market commentary only. They are not intended as specific advice. You should talk to your own investment professionals for specific advice. Information here is deemed reliable but should be verified by you if you think it's important.