View Full Version : Gold still aiming at $1,000 an ounce - but when?

11-03-06, 11:22 AM
Gold still aiming at $1,000 an ounce - but when? (http://news.google.com/news/url?sa=t&ct=us/0-0&fp=454b102fc2f0c4f5&ei=c2tLRcPKHc3caMydwKMG&url=http%3A//www.marketwatch.com/news/story/story.aspx%3Fsiteid%3Dmktw%26guid%3D%257BA7E65FC7-63EF-4984-A47B-916859E151D7%257D&cid=1110869931)
November 3. 2006 (Myra P. Saefong - MarketWatch)
For the tough gold traders who've stuck it out, it's been there, done that and earned that, lost that -- many times over, all year long. What to do next is the question.

Gold futures climbed to a 26-year high above $700 an ounce back in May and haven't traded anywhere near that level since.

When gold traded near $728 in May, "there was a lot of excitement," prompting scenarios of $1,000 gold prices -- even $2,000 and higher, said Steven Jon Kaplan, a senior editor at TrueContrarian.com.

"Since then, a worldwide economic slowdown has begun [and] the anticipated increase in demand for commodities has therefore been reduced," he said.

Now prices are beginning to show some signs of life again as uncertainty surrounds nuclear activities in North Korea and Iran, and the U.S. accuses Syria of planning to topple the Lebanese government. The U.S. dollar is also losing value and experts bet on further weakness in the currency. Some analysts say the slowdown in economic growth has spurred buying in gold as an alternative investment.


"The strongest reason to own gold right now is the fact that we have three U.S. aircraft carriers with task forces parked opposite Iranian shores," said Ralph Preston III, an account executive at San Diego-based Heritage West Financial Inc.

And Saudi Arabia has put its entire navy and special forces units in defensive position around the world's largest oil terminal, Ras Tanura, said Preston. News reports last week said there were threats of a possible al-Qaida attack on Persian Gulf oil terminals.

"This is an unusually high concentration of military build up on the part of the United States in the Persian Gulf," he said.
AntiSpin: So you're not caught by the surprise jump in gold prices, The Jerusalem Post (http://news.google.com/news/url?sa=t&ct=us/4-0&fp=454b294594c0cee2&ei=62tLRf7rNLCGabbNhZoG&url=http%3A//www.jpost.com/servlet/Satellite%3Fcid%3D1162378318799%26pagename%3DJPost %252FJPArticle%252FShowFull&cid=0) reports today, "The successful launch of three new models of sea missiles is the Gulf should send a strong message to the US to cease military maneuvers in the region, an Iranian navy chief said Friday."
"Our enemies should keep their hostility off the Persian Gulf," said Adm. Sardar Fadavi, the deputy navy chief of the elite Revolutionary Guard, hours after his troops tested the new missiles in Gulf.

"They should not initiate any move that would make the region tense," he said of the US.
China's state run China View (http://news.xinhuanet.com/english/2006-11/03/content_5287652.htm) declared:
An Iranian deputy navy chief said on Friday that the Iranian army launched three new missiles earlier during their ongoing military maneuver was a strong message for the United States to cease its military drills in the Gulf region."
China's state run People's Daily (http://english.people.com.cn/200611/03/eng20061103_318140.html) reported:
Iran's Revolutionary Guards test fired three new models of missiles in the ongoing military exercises in the Gulf region, the state-run television reported on Friday.

The television footage showed the missiles were fired from mobile launching carriers on the shore and from warships, and the missiles hit the targets successfully.

According to the report, the new types of missiles, dubbed Nasr, Noor and Kowsar, had been extended of their range and now could cover a range of 170 km.

The missiles are made by Iran itself and could be used in land- to-sea or sea-to-sea warfare, and due to the extension of their range, the missiles are able to hit all potential targets anywhere in the Gulf region and in the sea of Oman, said the report.

"The missiles are suitable to cover all the Strait of Hormuz, the Gulf and the sea of Oman," said Admiral Sardar Fadavi, the deputy navy chief of the Revolutionary Guards.

Iran started a new round of military maneuvers Thursday, during which the Revolutionary Guards also test fired ballistic Shahab-3 missiles with a range of more than 2,000 km.

Major General Seyed Yahya Rahim Safavi, commander-in-chief of the Revolution Guards, said on Wednesday that the 10-day military maneuvers, dubbed "The Great Prophet 2," would be carried out in the Gulf waters, the sea of Oman and 14 provinces of the country.
CBS News reported (my emphasis):
The Revolutionary Guards began maneuvers on Thursday, shortly after a U.S.-led military exercise in the Gulf. Iran test-fired dozens of missiles, including the Shahab-3 that can reach Israel, in military maneuvers that it said were aimed at putting a stop to the role of world powers in the Gulf region.
See "The Coming End of the US Foreign Investment Bubble: What if we lose? (http://www.itulip.com/forums/showthread.php?t=252)" from earllier this year.

The conclusion is mirrored in the conclusion of this article, "The dollar's full-system meltdown (http://onlinejournal.com/artman/publish/article_1380.shtml)" by Mike Whitney:

As long as oil is denominated in dollars, the central banks will be forced to stockpile American scrip regardless of its value. It’s no different than holding a gun to someone’s head. They will use our debt-plagued greenbacks or their cars and trucks will sputter, their tractors and factories will wheeze, and their economies will grind to a halt. It’s just that simple.<o>:p></o>:p>
America cannot maintain its superpower status unless it continues to control the global economic system. That means the linkage between the dollar and oil must be preserved. The Bush troupe sees this as an existential issue upon which the future of America’s ruling class depends. By 2020, 60 percent of the world’s oil will come from the Middle East. Bush will do everything in his power to control the resources of the Caspian Basin, thereby expanding US dollar-hegemony and paving the way for a new American century.

11-03-06, 08:32 PM
China has a trillion dollars in US reserves, far far far more than it needs to buy oil. I don't really buy the petro dollars argument any more. I think I believe the dollar tribute theory posed by Thomas Palley:


11-03-06, 09:46 PM
this "tribute theory" is just the consumer-of-last-resort of venerable memory. it's not so easy to just say to china: "develop a consumer market." they are, they are, but in a society with few social supports in terms of health care or retirement, it is natural that the savings rate be high. it will take a long time for that to change, and then only if the chinese manage to avoid social instability from un- and under-employement. my guess is that the shift only occurs in the context of a u.s. [and likely global] recession, during which it becomes impossible to maintain chinese export volumes.

11-03-06, 09:48 PM

Sounds like Economic MAD (http://www.itulip.com/economicMAD.htm) to me.

One thing that I see often repeated with the topic, and echoed my Thomas Pally is "encouraging consumption in Europe and Japan." I doubt that this is a long-term solution, not just for economic reasons, but for ecological (http://news.yahoo.com/s/nm/20061024/sc_nm/environment_wwf_planet_dc) reasons also.

And that much said, who could deny that Washington espouses the petro-dollar theory? In the short term, that may matter a whole lot more, as America's economic co-dependants are willing to let US foreign policy dictate thier CB decisions.

11-04-06, 04:32 PM
On Gold;

I dont think we will hit 1Grand gold mark till 2 things happen

1) Acknowledged inflation here in the next cycle, after the fed cuts rate, due to the big business establishment pressure.

2) A military intervention , probably Iran :D , of the scope of the first gulf war, sans invasion

I think we will blow past 1G$, and hit 1350$ if both these events come together, espically if the Iran intervention is unexpected.

The US wants more time on Iran for 2 reasons . To find a suitable pro western puppet to try and instill, and to continue to hype the nuclear aspect. Fear baby , just give me fear :mad:

11-06-06, 12:32 AM
I agree with blazespinnaker regarding petrodollars -- there are simply far more dollars out there than needed to buy oil. In fact every dollar held in official reserves is by definition one that isn't needed to buy oil; all the dollars needed to buy oil are already engaged for that purpose!

China especially. Since it has a large, structural trade surplus with the US, it is continually getting all the dollars it needs to buy oil, and then some.

Some comments on a few things I think are missing or lacking in the "conventional" gold analysis:

- it doesn't really matter if "regular folks" get scared enough to buy gold; we have essentially guaranteed central bank gold buying waiting in the wings. in fact accumulation here may explain the surprisingly-solid floor under gold of late -- if hedge funds have dumped gold, and small-scale interlopers followed, who has been buying gold?

- the peak price estimates are all incredibly conservative compared to the 80's peak, in inflation-adjusted terms, and that's with the official, low-balled inflation. there's much more real upside to go, and the economic threats we face now are even more severe.

- system instability/insolvency is going to rear its head big time, like never before. this is what gold as a wealth preserver is all about: system breakdown. a gradual decline of the dollar doesn't necessitate gold; it would just necessitate a higher rate of return on conventional assets than the rate of inflation. gold is for when you can't bet on the system at all. goldbugs have really taken their eye off the ball with this one; how they can not be continually screaming about the housing/banking/hedge fund financial bubble at the top of their lungs, I don't know. but it seems like it can only go one of two ways: get bigger, or come apart horribly.

11-06-06, 08:09 AM
What good is screaming going to do :confused: . This is a government by and for the corporation, not by and for the people. It will take some form of dire financial straits here till my countrymen/women pull their collective heads out of their assess:( So sad

Of course there is billions waiting to move in. We wont see 400$ gold again, probably not 500$
Silver is the best bet for the common working man, as far a cost/benefit ratio with its duality as a currency/commodity