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Guest Post: How High Will Gold Go in 2011?
Since CNBC has been issuing a non-stop barrage of its own version of reality vis-a-vis gold and other precious metals, it may be time for some counterpoint. For all those who believe that the drop in gold from levels which were virtually all time highs on Monday, is the equivalent of the apocalypse, we urge that you sell: volatility will be a key part of the game, and it may be prudent for timid elements to run into the levered safety of 5x beta stocks, trading at 100x forward P/E multiples, which are guaranteed to never go down. It will also likely shake out the weak hands, and certainly provide some cheaper entry points (something which we are confident Cramer's endless prattling on gold will do on its own sooner or later). That said, here are some amusing observations by Jeff Clark of Casey Research on how high gold could go in 2011. Keep in mind that just as all the program content on CNBC, this is nothing but pure abject speculation. In a world of central planning, none can predict the future with any does of certainty.
By Jeff Clark, Casey Research
How High Will Gold Go in 2011?
After stellar years for both gold and silver, what prices will
precious metals hit in 2011? Here's an analysis based strictly on their
price behavior in the current bull market.
First, take a look at the annual percentage gains that gold has registered since 2001 (based on London PM Fix closings):
Excluding 2001, the average gain is 20.4%. Tossing out the additional weak years of '04 and '08, the average advance is 24.8%.
So we can make some projections based on what it's done over the
past 10 years. From the 12-31-10 closing price of $1,421.60, if gold
matched…
- The average rise this decade, the price would hit $1,711.60
- The average rise excluding the three weak years = $1,774.15
- Last year's gain = $1,858.03
- The largest advance to date (2007) = $1,875.09
But what if global economic circumstances continue to deteriorate? What
if worldwide price inflation kicks in? And what if government efforts
at currency debasement get more abusive? If Doug Casey is right, a
mania in all things gold lies ahead – what if that begins in 2011?
Here's what price levels could be reached based on the following
percentage gains.
- 35% = $1,919.16
- 40% = $1,990.24
- 45% = $2,061.32
- 50% = $2,132.40
- 1979's gain of 125.7% = $3,208.55
It thus seems reasonable to expect gold to surpass $1,800 this year, as
well as reach a potentially higher level since the factors pushing on
the price could become more pronounced.
Here's a look at silver.
As you can see, silver had its biggest advance in 2010. The average
of the decade, again excluding 2001, was 27.5%. And also tossing out
the '08 decline, the average gain is 34.3%. So, from the 12-31-10
closing price of $30.91, if silver matched...
- The average rise this decade, the price would hit $39.41
- The average gain excluding 2008 = $41.51
- Last year's advance = $56.22
- The 1979 gain of 267.5% = $113.59
So, $50 silver seems perfectly attainable this year. And that's without monetary conditions worsening.
It's titillating to ponder these advances for gold and silver,
especially when you consider we might be getting close to the mania.
And if we are, that should do wonderful things to our gold and silver
stocks, too.
I would add one caution: the odds are high that there will be a
significant correction before gold begins its march to these price
levels. In every year but two ('02 and '06), gold fell below its
prior-year close before heading higher. And here's something to watch
for: in every year but one ('08), those lows occurred by May.
In other words, a buying opportunity may be dead ahead. And if you buy
on the next correction, your gains on the year could be higher than the
annual advance.
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PLZ, by all means..., short away.
Yesterday I could not find a gold bear on the Bloomberg Chart of the day page. Gold is going to break $1000 dollars and has seen the high for the year. The hard currency play may be over for now! Suck it up... The world may be ending but not this year!
Keep saying that, and eventually you'll be right! It just hasn't happened for the last decade or so. But tomorrow is another day! Chin up.
UUP looks like its starting a run... no hurry on PMs.
I concur
I'm long term bullish on PM but doesn't it bother anyone that both gold was essentially flat and silver were down in 2008, a year of significant "events"? I expect that there are a number of things that could make 2011 also an "event year"? If that's the case, a big sell off could precede a larger, long term rally.
Short it then. You're going to make killing when Gold goes to $1000. And by all means come back and gloat when you become fabulously wealthy shorting Gold.
Randgold Resources (the best gold company) vs. AIG (the worst financial company)
GOLD stock owners must be pulling their hair out.
LOL. Randgold's been having serious operation and political issues in Africa, and its share price has dropped 25% since October. How do you figure this is the "best"?
Rangold? Give me a fucking break- thats some shit south African Outfit that:
- gets no power
- political turmoil abounds
- is a senior gold miner with decreasing mine life
Please note that many explorers amd juniors who axtually know where the new gold is are stable, or still going up because they are acquisition targets.
Even better still, as oil slumps and labor stalls, even gold going to 1200 will have a better real value versus its peer commodities. Thats because its- money.
And, like any depression, the senior currency is getting stronger despite devaluation attempts. See British pound, 30's dollar, Roman gold coins.
I cannot wait until thw goldbugs get rearranged and the "gold in the bubble" peeps get their head handed to them.
If you look at the US dollar and Gold miners during the 30's to 50's, those were consistent, excellent investments as weak fiat currencies fell off the map.
Senior miners have been hedging, masturbating, playing with the FED and overall messing up their business model for 30 years and have to play catch up
Robo is no trill, but I think the GDX, HUI or GDXJ chart would be more accurate as a display of the sector. South African gold miners, despite reserves,consistently have issues getting the ore out of the ground- which leads to highextraction costs and lower margins. Plus, Rangold has to be like the WORST example of a gold mimer
Agreed... don't like Rand Gold either. In fact most of the seniors have issues. I prefer a company like Avion or Orvana or Fronteer. If you want to go smaller, Alexis.
The population of anti-gold trolls has mushroomed. I love the smell of desperation in morning!
Ya. This is the fun part. But they'll get ugly. Clean your gun, sharpen your knife and learn music chords. You'll want to know if that skull you just crushed was a c-flat or f-sharp.
LOL!
I wish I were kidding. But here's how it works.
All you have to do to govern and break the law is break the truth. It's a two layer defense. If those you govern repair that truth which has been done you stll have to break law enforcement.
There's going to be a work ethic contest between the liars servants and the lied to. Because the castle of peace has a lying bully daddy living in it who isn't going to give you any peace without a whole lot of mind screwing and getting you to attempt appeasement. You will know your kind by what they attemp to break. What they attempt to repair and you're enemies will never be made clearer to you than they will over the next two years.
Gold monthly chart looks parabolic and is a long
way from the long term trend line. Long term price action is also converging.
Chart at my blog.
http://stockmarket618.wordpress.com
I was looking at the daily chart for CEF (holds gold & silver bullion closed-end fund - good one).
Closes
$20.64 on 1-3-11. close to it's historical peak price.
$19.93 on 1-4-11. Big down day for gold and silver.
$19.77 close today but it was as low as $19.19 intraday and rallied back.
Not a particularly big correction here. It could go lower but it is holding up well considering CNBC saying precious metals are finished. Or the comments by RoboTrader and Hairy Wanker.
Dow:Gold ratio continues to behave as it always has, declining from its high of 45 to an eventual bottom at around 1.
I have said and continue to hold that we will see that at 5,000 Dow and $5,000 gold. As for when, I have been holding out for 2015 but with all the central bank hubris and fundamentally bad policy on bond haircuts, am thinking we could be looking at 2013 now.
For 2011, look for $120 oil to begin a nice commodity mini-panic (that will go with $4 gasoline). Gold clearly goes over $2,000 and most likely visits the 'halfway point' of $2,500 before falling back 20%+ to make more investors puke...unless they actually understand what's going on.
And there you have it: free investing advice. I haven't been this psyched since 4 Kids Entertainment in the early Pokemon days.
Yep, in this longer trend, you can just buy gold, mimers and especially junior miners and just sit on this longterm.
The FED manipulation has slowed the credit crash, but we are still in a depression. Yeah, the "recession" is over because recessions are just business cycles of supply amd demand. Depressions are secular money supply contractions- amd no matter how much the FEDheads print, its nothing compared to asset valuation loss and credit loss. Credit is money in this world now. Its deflation. People who associate the rising price of milk and oil to inflation don't understand that inflation is an increase in money supply not necessarily prices.
So, as money supply collapses, liquidity is required. That is dollars, euros and even gold for transaction. Gold just happens to be the best, undilutable money.
Hence, every fucking central bank in the world is hoarding money supply in the form of gold. iMF gold is a promise, not an asset. When the shit hits the fan, like 2009 march or June 2010, gold and the dollar rise. Thats just how this shit works. Physical gold goes for way over fix, and Switzerland has stopped releasing coins 6 times in the last 3 years.
The dollar will be the transactional currency of choice until someone can figure out how to unwind all this crap. That will take 20 years. See British Pound- who did the same printing experiments before.
Loss of faith does not mean the dollar is worthless...yet.
Comex gold is also just a derivative, and not a physical asset. So, why wouldn't trash paper sell off to the greater fool? Good luck collecting on GLD.
How do you arrive at your conclusions?
This is slightly off topic but has anyone else seen that Colbert mocked investing in Gold for the 2nd day in a row? Today he was saying it was like investing in banannas and yesterday Ron Paul made Dave Leonhardt look a bit foolish when talking about going back to gold.
Sorry, Judge, I missed Colbert, but funny you should ask because...
Yes!... We have no bananas. Which is way worse than just being a regular banana republic.
It's like Gilligan's Island with no Ginger or Mary Ann. And none of their banana cream pie.
Jim Rickards - Gold Standard Coming, Fed’s Hoenig Correct
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/1/6_Jim...
Thanks! Good get. GATA had good stuff today too.
I've been trying to follow this line over the last couple of months
Hoping for traction from The Powers That Were. Saw Hoenig's quote earlier today...
Be still my beating heart. Now... let's just move the gold away from the FRBNY.
Paging Ron Paul.. paging Ron Paul...
Government won't switch to gold standard voluntarily. Gold standard inhibits deficit spending, it also eliminates the hidden tax of inflation, which is basically taxation without representation. Banksters won't switch to gold standard voluntarily because they need to raise reserve rate dramatically, maybe even abolish fractional reserve altogether. That wipes out most of their interest profit and stops all their risky investments.
If we are betting on a future gold standard system, we probably need to wait for a long time. First the cow manure has to hit the fan, meaning the fed totally loses control over inflation, then there's gonna be a total currency collapse, civil unrest/martial law, afterwards the government prints a new currency, and backs it up with gold. They'll do it grudgingly because the people and international community need some faith in the new currency (by then, the government would have already defaulted on all previous debts and obligations and liabilities). Your gold will only shine after the chaos
That is actually the best case senario. It can only happen if the government still has some gold in Ft Knox and/or Federal Reserve Bank of NY is willing to loan some gold.
What if there is no gold? There are few options left. 1. a communist dictatorship like Cuba. 2. A fascist dictatorship like Italy 3. Military junta rule like Chile or Burma 4. Government mortgages the rear end of all Americans and their offspring to foreign powers to get a loan, selling everyone into perpetual indentured servitude. (some conspiracy folks think that already happened under Wilson or Roosevelt) 5. Civil war or WW3 6. Any combination of the above.
If you are not part of the TPTB (the 400,000 people worldwide who are either higher up in the power structure, or can afford to pay 1 billion euro per head, according to the depiction in the movie "2012"), none of the options looks good.
ron paul probably knows, theres no gold in fort knox. if the truth gets out, game over
A better title would've been: "How low can Fiat go?"
How many zeroes can you print on paper going fo $85/ton (roughly)?