This page has been archived and commenting is disabled.

Standard Chartered: "Three Factors Will Drive Gold To $5,000"

Tyler Durden's picture




 

Following less than parabolic moves higher in the precious metals complex over the past several weeks has extinguished some of the fervor in the space, which of course is welcome: a slow, gradual increase which does not provoke the CME's attention is far better for the boiling free than a sudden surge in prices. Yet the recent period of stability may soon be over. Standard Chartered has just released a report which looks at actual gold breakeven prices, production bottlenecks, central bank interest, and Chinese and Indian buying, and comes to the conclusion that $5,000 gold may just be a matter of time. To wit: "The limited supply comes at a time when central banks have completely changed their tune on selling down their gold stocks and now appear likely to accelerate their net buying programmes. China is way behind the curve. Currently, only 1.8% of China’s foreign exchange reserves is in gold; if the country were to bring this proportion in line with the  global average of 11%, it would have to buy 6,000 more tonnes of gold, equivalent to more than 2 years of gold production. We believe that these factors – limited gold production, buying by central banks and increasing demand from India and China – can potentially drive the  gold price to US$5,000/oz, as highlighted in our commodity team’s earlier report." And what according to Std. Chartered is the best way to capitalize on this undervaluation: "We believe the best ways to invest in the gold cycle are buying physical gold (a safe asset) or investing in junior gold miners (highest leverage to the gold price) that are 1-2 years away from production." Perhaps the current price 66% lower is therefore not a bad entry point...

From the report:

We are bullish on gold. Most market commentary on gold has centred on the direction of US dollar movements or inflation/deflation issues. We go beyond this to examine future mine supply, which we think is just as important a driver. Our comprehensive study of 375  gold projects supply suggests a very limited production growth profile for the next five years. A ten-year bull market in gold has done little to drive gold production. The gold miners are running to stand still. A lack of funding from equity markets and a shortage of large gold mines makes it difficult for the industry to compensate for the depletion caused by aging mines and falling grades. In our base case, our 375-mine supply model shows net production growth of 3.6% pa. over the next five years.

Our IRR analysis shows that for the major gold projects under construction, for which the acquisition cost of gold resources has already been spent, the gold price would need to be US$1,400/oz in order to generate a 20% IRR, which is usually the minimum return  requirement. For greenfield projects going forward, the gold price would need to be nearly US$2,000/oz to produce an IRR of 20%. We believe this daunting hurdle will likely further delay gold production.

The limited supply comes at a time when central banks have completely changed their tune on selling down their gold stocks and now appear likely to accelerate their net buying programmes. China is way behind the curve. Currently, only 1.8% of China’s foreign exchange reserves is in gold; if the country were to bring this proportion in line with the global average of 11%, it would have to buy 6,000 more tonnes of gold, equivalent to more than 2 years of gold production.

We believe that these factors – limited gold production, buying by central banks and increasing demand from India and China – can potentially drive the gold price to US$5,000/oz, as highlighted in our commodity team’s earlier report, Gold – Super-cycle to extend above US$2,100/oz (17 April 2011).

We believe the best ways to invest in the gold cycle are buying physical gold (a safe asset) or investing in junior gold miners (highest leverage to the gold price) that are 1-2 years away from production. We are cautious about the gold majors. Project plans of the big five gold producers by market cap suggest an average production CAGR of only 4% in the next five years. They need to depend on expensive acquisitions in order to grow further. As a form of affirmation, the share price index we constructed for the gold majors underperformed  the gold price by 147ppt over 1995-2011.

Full report:

In Gold We Trust 061411

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 06/14/2011 - 09:31 | 1367405 qussl3
qussl3's picture

A big bank promoting gold?

What the hell am I supposed to think now?

 

Tue, 06/14/2011 - 09:45 | 1367419 hedgeless_horseman
hedgeless_horseman's picture

The Standard Chartered branches in Hong Kong are very good banks to work with if you want to diversify assets to the RMB or Hong Kong Dollars.

There is a branch at Fo Tan, close to the horse track at Sha Tin, so one need not carry one's winnings too far.

http://www.hkjc.com/english/racing/entry.asp

Tue, 06/14/2011 - 10:35 | 1367550 TGR
TGR's picture

Standard Chartered is one of the three big-wigs in Hong Kong which print fiat, aka the Hong Kong dollar. I'd trust one of the local well-balanced family-owned banks like BEA (which incidentally has been informing its premier customers of the benefits of gold since 2003/2004) before I would Standard Chartered.

Tue, 06/14/2011 - 11:34 | 1367782 hedgeless_horseman
hedgeless_horseman's picture

Standard Chartered endeared themselves to me in the days when, if you were a gwai lo with a business plan and a chinese partner, you could borrow limitless amounts of that fiat on very easy terms.

Tue, 06/14/2011 - 10:33 | 1367551 TGR
TGR's picture

double up

Tue, 06/14/2011 - 09:37 | 1367420 GetZeeGold
GetZeeGold's picture

What the hell am I supposed to think now?

 

Dogs and cats...living together in sin. In short....mass hysteria....could be almost Biblical Proportions.

http://www.youtube.com/watch?v=O3ZOKDmorj0

 

Tue, 06/14/2011 - 12:48 | 1368040 Johnson Sandwich
Johnson Sandwich's picture

I want to sell a small amount of silver eagles. Does anyone know of a good coin shop in Holland or Sweden? is there a comprehensive list of coinshops in Europe?

thanks in advance!

Tue, 06/14/2011 - 17:56 | 1369134 Temporalist
Temporalist's picture

@ qussl3

"What the hell am I supposed to think now?"

 

That this is still just the beginning.  Don't think they'd be waiting around  for the price to rise more.  Big money is starting to move in why wait on the sidelines?

Tue, 06/14/2011 - 09:31 | 1367407 Michael Victory
Michael Victory's picture

 

One reason governments and bullion banks are able to manage the gold markets is their ability to diffuse demand for physical gold. Demand is channeled into non-gold markets that ride the gold price without affecting it. Ex. Comex, ETFs and G shares.

Gold demand is kept away from the market by these and other derivatives.

Recommendation: Keep stackin. 

Full Bit - What is the real price of Gold?

 

Tue, 06/14/2011 - 10:53 | 1367595 DoChenRollingBearing
DoChenRollingBearing's picture

+++

Everyone with wealth to preserve ought to have between 5% - 20% of their net liquid wealth in gold and other PMs.  And that, of course, would be real physical gold stored near you (preferably not ALL at a safety deposit box at the bank).  Disclosure: I am at 12% or so.

I believe the Standard Chartered price of $5000 is probably a low estimate, especially if we have:

-- hyperinflation

-- 100 x paper claims on gold as there is physical

fofoa.blogspot.com

and my blog, gmail me to get the link, it is under my real name.

Tue, 06/14/2011 - 11:22 | 1367715 jeff montanye
jeff montanye's picture

another bullish fact is that china is hardly alone in its high foreign currency reserves/low percent in gold:  japan (#2 in total foreign currency reserves) 3%, saudi arabia (#4) 3%, taiwan (#5) 4.6%, brazil (#6) .5%, south korea (#8) .2%, singapore (#10) 2.5%, thailand (#12) 2.5%.  these "public" figures may be somewhat low but the potential rush to the exit seems compelling. 

 

Tue, 06/14/2011 - 09:32 | 1367412 Cultural Capital
Cultural Capital's picture

It ain't a rumour...

Tue, 06/14/2011 - 10:17 | 1367511 JW n FL
JW n FL's picture

looks like someone is selling its (Standard) holdings to its customers.

But this could just be for the short term drop that they want to exit before to capitalize on the 20% - 30%?

They like everyone else are killing themselves looking for yeild, and this upcoming price drop could be just what they needed to get year end earnings in order?

Tue, 06/14/2011 - 09:33 | 1367417 GeneMarchbanks
GeneMarchbanks's picture

BTFD!

Tue, 06/14/2011 - 09:32 | 1367423 achmachat
achmachat's picture

and today we actually have a real dip!

I used up all my dry powder two months ago, otherwise today would have been an awesome day to load up!

Tue, 06/14/2011 - 09:35 | 1367429 GetZeeGold
GetZeeGold's picture

 

and today we actually have a real dip!

 

It was a really short one.

 

 

Tue, 06/14/2011 - 09:53 | 1367469 Idiot Savant
Idiot Savant's picture

Relax, there will be lots of buying opportunities between QE packages - July through ??. I wouldn't be surprised to see sub $1200.00 gold, maybe even lower.

Tue, 06/14/2011 - 10:01 | 1367482 redpill
redpill's picture

Doubtful, even if we get some big deflationary swoons with the end of QE2.  Look at the 1 year or 5 year chart.  Gold is on a steady march.  That it has held over $1500 as long as it has signals good consolidation as well.

Silver, on the other hand, is the stomach-lurching roller coaster.  It could move $10 in either direction at the drop of a hat and it wouldn't surprise me.

Tue, 06/14/2011 - 10:06 | 1367494 Cognitive Dissonance
Cognitive Dissonance's picture

Silver, on the other hand, is the stomach-lurching roller coaster.

May I suggest using Silver for Medicinal purposes to calm that sour stomach.

http://en.wikipedia.org/wiki/Medical_uses_of_silver

Tue, 06/14/2011 - 10:17 | 1367510 redpill
redpill's picture

That's what absinthe is for :)

Tue, 06/14/2011 - 10:39 | 1367561 Cognitive Dissonance
Cognitive Dissonance's picture

What a way to go.

Tue, 06/14/2011 - 10:56 | 1367603 DoChenRollingBearing
DoChenRollingBearing's picture

DCRB's "Death After Midnight"

-- 4 parts berry flavored vodka

-- 1 part the Green Fairy (absinthe)

All straight out of the freezer...

Tue, 06/14/2011 - 11:10 | 1367670 dark pools of soros
dark pools of soros's picture

or go with the Green Python

2/3 throwback Mountain Dew

1/3 absinthe

some ice, drink slowly at first, faster as the ice melts

Tue, 06/14/2011 - 11:19 | 1367674 dark pools of soros
dark pools of soros's picture

dupe.. server must be drunk...

Tue, 06/14/2011 - 11:14 | 1367671 redpill
redpill's picture

My current favorite is called Ridge Extrait d'Absinthe Verte.  From a little distillery in Montana by the same name.  They grow their own herbs, wonderful stuff.

Tue, 06/14/2011 - 11:17 | 1367680 DoChenRollingBearing
DoChenRollingBearing's picture

I'll look for it!  Thanks for the suggestion!

Tue, 06/14/2011 - 11:16 | 1367705 redpill
redpill's picture

I order it from here: http://www.caddellwilliams.com/catDetail.php?id=10&PHPSESSID=a0b65b01c07...

 

Scroll down to Ridge Distillery, and the one I prefer is listed third.  $60 may seem pricey but for absinthe it's actually very reasonable, and you only drink one ounce at a time, so you get between 20 and 25 glasses out of a bottle.

For more absinthe information, see the Wormwood Society:  www.wormwoodsociety.org

Tue, 06/14/2011 - 11:27 | 1367743 JW n FL
Tue, 06/14/2011 - 11:32 | 1367750 JW n FL
Tue, 06/14/2011 - 11:52 | 1367837 Enceladus
Enceladus's picture

My realestate agent recomended this brand. No joke. I guess he's been drinking a lot lately.

Tue, 06/14/2011 - 16:14 | 1368810 Fat Ass
Fat Ass's picture

Redpill, setting aside actual vintage (say, pre-WW1) bottles of absinthe (say, http://www.finestandrarest.com/absinthe.html),

may I recommend simply the "AMER" brand of current production.

You will find it an interesting comparison with your good Montana product mentioned.

You may also want to try any of the small makers today found in Neufchatel in Switzerland (where absinthe originates).

Tue, 06/14/2011 - 16:55 | 1368968 redpill
redpill's picture

Oh I've tried them all pretty much, including the vintage.  I collect the stuff :)

 

But "Amer" is actually a category/type of absinthe, characterized by a misguided attempts to market a particular ingredient called thujone.  There are several brands with the word in their name, you'll notice, but I've yet to have one that is particularly special

 

Tue, 06/14/2011 - 10:24 | 1367518 Long-John-Silver
Long-John-Silver's picture

So you can eat Silver. Just don't eat so much of it you turn blue.

http://hidensneek.com/wordpress/wp-content/uploads/2009/12/blue-man.jpg

Tue, 06/14/2011 - 10:32 | 1367555 Cognitive Dissonance
Cognitive Dissonance's picture

On the other hand, that would solve all the makeup issues for the Blue Man Group.

Tue, 06/14/2011 - 12:55 | 1368060 kumquatsunite
kumquatsunite's picture

Ridiculous! (See: The Princess Bride). Make a quick list of what China needs: fresh water! (lots of it), food (lots of it!), fresh air (lots of it!) and less people. China cannot continue as they've been going along. They built a factory entity in a weird chotchkee world that no longer can afford all those cheap chotchkees. Think about it: 1.3 BILLION people. Gold is at the bottom of the list of what 1.3 billion people need.

When someone starts bantering around 5000 gold, there is a sense of desperation in the air. Someone has bought a lot of gold and they don't like knowing that the gold is going down down down. Mine supply is up and more efficient than ever. And if you knew what I know about gold you would not own any of it. Pretty and shiny but what can you do with it? Nothing.

Instead put your money in great stocks that are creating things people actually need: wind power, solar power, fresh water and above all, stop all immigration into the United States. "Family reunification" immigration is killing off our country. There are now one-third of the country is not born here, and if the illegals aren't run back to mexico...as they should be...there is no hope for your children. America is for Americans. The pies is limited; the pie is small when you look at fresh water and fresh air; and the pie belongs to us, not them. Otherwise I'd go live in Mexico, cheap. But in Mexico I'm treated like an outsider and no one accomodates my language, gives me free medical, food stamps, and let's me cheat the system. 

By the way, ya'll see that Oboma has always talked about being a "one term" president? He's hoping that by doing so he'll be able to avoid having to find that real birth certificate; that ya'll will let him slide away with the benefits of having been president. Don't do it...we are a country of honor, or were. As such, any documentation asked for of someone who is being paid by the taxpayers, should be public, and provided immediately. God bless Pat Buchanan and Judge Judy. They may be the only people left in America completely, jingoistically American. The rest of Americans are brain-addled by the drumbeat of "compassion" which actually means: white genocide, balkanization and deconstruction of this country, and the ceding of America to immigrats and floatsam form the third world. Ah, isn't it great that all the patriots died so the liberals could in a couple of decades destroy all that made this country great. And just as a reminder, ain't nothign wrong with being white...tee hee. Maybe we need some "white affirmation" so that white people can have some kind of self-esteem? Anyways, in the decade to come gold won't be worth nothing; you will need to know how to cook, bake, and grow veggies; we are headed for the "lost decade" cause to juice the economy the liberals gave away the profits of years to come. And that's true for gold and silver also: the profits have been taken for years to come...no more until around 2025....

Tue, 06/14/2011 - 13:30 | 1368147 Bay of Pigs
Bay of Pigs's picture

What a bunch of useless shit you spew. 

Apparently you know very little about the gold market, especially in China.

 

Tue, 06/14/2011 - 15:47 | 1368706 knowless
knowless's picture

the immigrants have no where to go back to, they have been here for generations, and are now as american as anyone else, just with different skin color and background. their home nations will not take them, but the army might.

Tue, 06/14/2011 - 10:23 | 1367523 SheepDog-One
SheepDog-One's picture

Its all priced in already, thats their QE conundrum.

Tue, 06/14/2011 - 09:34 | 1367427 HITMAN56
HITMAN56's picture

be careful

Tue, 06/14/2011 - 09:35 | 1367430 css1971
css1971's picture

Timescale?

 

1% pa, 10%pa 15% pa, 50% pa?

 

Tue, 06/14/2011 - 09:36 | 1367432 PaperBear
PaperBear's picture

Central banks do not hold any silver in their basket of reserve assets but it is gold's cousin in terms of being a historic store of value and it is also an industrial metal with new uses being thought up all the time.

When the flight from fiat paper currency begins, it will be into gold and silver.

While gold has been stockpiled and is the larger market, silver has been consumed and consumed mostly in trace amounts and is the smaller market.

Get physical silver before warehouse inventories are all gone.

Tue, 06/14/2011 - 09:39 | 1367438 Confucious 222
Confucious 222's picture

Get physical silver and multiply your wealth.

Tue, 06/14/2011 - 13:02 | 1368077 kumquatsunite
kumquatsunite's picture

Actually this isn't true. There is a lot of silver tucked away everywhere. Plus silver is being racheted up for mining, as in Mexico which is opening new silver mines and in Nevada also. Silver is also not "consumed"; all silver used in any manufacturing process is recycled as the computers, et al, come back through the system. Also, no one uses silver in the ways it used to be bought: silver teapots and such so all of that is available. Lastly, since no one has been interested in silver for thirty years there is a thirty year supply available that no one seems to talk about...silver is just a bubble and should be at $1.00 an ounce and no more...

Tue, 06/14/2011 - 13:35 | 1368162 Bay of Pigs
Bay of Pigs's picture

"silver is just a bubble and should be at $1.00 an ounce and no more..."

Thanks for the good laugh troll. I needed one.

Tue, 06/14/2011 - 16:11 | 1368797 RockyRacoon
RockyRacoon's picture

Look.  I respect your point of view, but it's based on some fallacious data.   You really should get current on some of the things you take for granted, e.g.: Silver in electronic equipment is, for the most part, not economically recoverable.  Hence, it goes into landfills.  There is more, but I'll let you stew in that for a while.

Tue, 06/14/2011 - 13:06 | 1368079 kumquatsunite
kumquatsunite's picture

Actually this isn't true. There is a lot of silver tucked away everywhere. Plus silver is being racheted up for mining, as in Mexico which is opening new silver mines and in Nevada also. Silver is also not "consumed"; all silver used in any manufacturing process is recycled as the computers, et al, come back through the system. Also, no one uses silver in the ways it used to be bought: silver teapots and such so all of that is available. Lastly, since no one has been interested in silver for thirty years there is a thirty year supply available that no one seems to talk about...silver is just a bubble and should be at $1.00 an ounce and no more...

Tue, 06/14/2011 - 13:03 | 1368082 kumquatsunite
kumquatsunite's picture

Actually this isn't true. There is a lot of silver tucked away everywhere. Plus silver is being racheted up for mining, as in Mexico which is opening new silver mines and in Nevada also. Silver is also not "consumed"; all silver used in any manufacturing process is recycled as the computers, et al, come back through the system. Also, no one uses silver in the ways it used to be bought: silver teapots and such so all of that is available. Lastly, since no one has been interested in silver for thirty years there is a thirty year supply available that no one seems to talk about...silver is just a bubble and should be at $1.00 an ounce and no more...

Tue, 06/14/2011 - 18:53 | 1369250 doesmybuttlookf...
doesmybuttlookfatinthis's picture

Silver is not consumed? They don't recycle silver. Not since they stopped using film. It cost too much too reclaim.  The following is a short list of uses for silver.

Tue, 06/14/2011 - 09:39 | 1367436 Cole Younger
Cole Younger's picture

If gold goes to $5000.00 an ounce, the U.S. dollar will be worthless. There comes a point where pricing gold in U.S. dollars becomes meaningless.

Tue, 06/14/2011 - 09:48 | 1367449 Max Hunter
Max Hunter's picture

This is my thinking as well.. At this point, people will be more concerned with the price of food and energy.  The price of PM's will be a side note for 99% of the country.

Tue, 06/14/2011 - 10:02 | 1367489 zaknick
zaknick's picture

That's exactly what they're saying: the dollar needs to devalue massively in order to reflect (hell yes) FUNDAMENTALS. Who the hell (economically) is the US anymore? 300 million broke ass consumers are found everywhere, nothing special.

This downfall of the vanities going to be epic!

Tue, 06/14/2011 - 09:52 | 1367463 LawsofPhysics
LawsofPhysics's picture

There comes a point where pricing any physical asset of real value in any fiat paper becomes meaningless.

Tue, 06/14/2011 - 09:56 | 1367475 Bastiat
Bastiat's picture

It's not worthless if 5,000 of them can an ounce of gold--that's devalued, not worthless.  At 50,000 it's getting closer to worthless.  At 1 billion you're just about there: see Weimar or Zimbabwe.

Tue, 06/14/2011 - 10:27 | 1367527 SheepDog-One
SheepDog-One's picture

98% devaluation of the US Dollar since 1913.

Tue, 06/14/2011 - 10:34 | 1367547 LawsofPhysics
LawsofPhysics's picture

on a long enough timeline...

Tue, 06/14/2011 - 10:34 | 1367549 tmosley
tmosley's picture

Wait for 98% devaluation since last Thursday.

Tue, 06/14/2011 - 09:57 | 1367477 Hearst
Hearst's picture

While $5000 per oz Gold or $500 per oz Silver for that matter would to most of us here mean the US Dollar has become worthless, I don't think everyone will hold to that view.  Think of how entrenched the USD is.  The vast majority of people have no idea about sound money.  Most would view those prices in PM (if they even noticed) as 'commodity spikes', bubbles about to burst.  Gold and Silver alone skyrocketing wont be enough to make the masses go torch and pickforking in the night.  Rising food and gas prices?  That's another story.

Tue, 06/14/2011 - 10:13 | 1367504 LawsofPhysics
LawsofPhysics's picture

spot on.  Gold and silver remain the safest stores of value, but everyone who survived the depression knew you only buy them when they are cheap and everything "appears" to be doing just fine.  When the fraud becomes apparent to everyone, it is usually too late to start buying.  I sold all my paper gold in November to expand some of my operation and become more efficient.  I also went to numerous fiat cash to simply cover everyone's salary through August of 2012.  If things still are not sorted out (i.e. the fraud at all levels is prosecuted), then fuck it, my employees and I are well prepared to service the local economy with enough physical assets in arable land (and many of us are retire military currently serving as local SWAT volunteers and firemen) to survive this all just fine.   The best thing to do is to educate your friends and family about smart money and what your options and and simply prepare.  No one's survival is guaranteed, especially those people who don't want to pay their dues, don't want to work hard, or make stupid decisions.  This is all a fucking product of the whole "everyone is a winner" mentality we have had in schools for 30+ years.  Bullshit, everyone is not a winner and guess what, if you make a stupid decision then you suffer the consequences.  People should get a chance to right their wrongs, but come on people, wake the fuck up already.  The worst thing is, those that will go "pitchforking" first will be those that are pissed that the government didn't "save" them.

Tue, 06/14/2011 - 10:23 | 1367525 JW n FL
JW n FL's picture

Those that go first will be the ones who want the Lobby Whores to pay for their Treason!

 

Those sitting on their fat ass waiting for others to do their work for them so that they can assume some roll seen as befitting...

 

People who did nothing are just as bad as people who did everything, you fuckers will get yours in the end.

Tue, 06/14/2011 - 13:15 | 1368105 FlyPaper
FlyPaper's picture

Huh?  "People who did nothing are just as bad as people who did everything..."  ?

Tue, 06/14/2011 - 16:18 | 1368811 RockyRacoon
RockyRacoon's picture

JW doesn't define words like the rest of us, least of all the way Webster does.

He makes good points but you have to live in his head for a while to get it.

It's really scary and cobwebby in there as well!

Tue, 06/14/2011 - 10:22 | 1367521 Long-John-Silver
Long-John-Silver's picture

This can be called "The Zimbabwe effect".

Tue, 06/14/2011 - 10:27 | 1367529 mayhem_korner
mayhem_korner's picture

If gold goes to $5000.00 an ounce, the U.S. dollar will be worthless. There comes a point where pricing gold in U.S. dollars becomes meaningless.

Agreed.  Anything priced in fiat at that point will just be feel-good for all of the things that FRNs were traded for before it collapsed.

Better measures are things like gold (or silver) oz price of real estate, groceries, fuel, etc. 

Tue, 06/14/2011 - 10:28 | 1367537 tmosley
tmosley's picture

No, it will be worth a bit under a third of what it is now, but it will probably still buy more than half of what it does today.

Why must people always claim that higher PM prices mean the end of the dollar?  

When gold passes 1,000,000 an ounce, you might have a case.  Until then, the important thing to watch for dollar strength is non-PM commodities, especially the ags.

Focusing too much on PM prices isn't healthy.  The prices we see now are artificial, a product of huge investment in unbacked or partially backed paper products.  Watch the commodity complex as a whole to determine the true value of the dollar.

Tue, 06/14/2011 - 11:04 | 1367624 DoChenRollingBearing
DoChenRollingBearing's picture

You raise a good point about watching other commodities, I agree even more about the ags.

But, if I don't have "skin in the game", I tend to not watch things...  That is one reason why I own "Paper Food ETF" DBA, which is kind of an ETF of many food comoodities all rolled into one.

CORN is the ETF for corn only.  IIRC, JJG is the ETF for grains only.

Still, my holdings of DBA, while up nicely and a good inflation play, are peanuts next to what I hold in GOLD.

 

Tue, 06/14/2011 - 11:22 | 1367724 gmrpeabody
gmrpeabody's picture

No..., not worthless. But it would be worth less. My guess is the DXY would be in the neighborhood of .35 to around .45..., very realistic and not the end of the world or America. Painful, but not Road Warrior.

Tue, 06/14/2011 - 13:32 | 1368154 LoneCapitalist
LoneCapitalist's picture

Since the DXY measures the dollar against other currencies, wouldnt the DXY hold up better than that?

Tue, 06/14/2011 - 13:04 | 1368087 kumquatsunite
kumquatsunite's picture

Good point. These bubble talkers must need some more profits!

Tue, 06/14/2011 - 09:46 | 1367445 gwar5
gwar5's picture

Central banks printing lots of money and not selling their gold. Tells you all you need to know. 

Jim Sinclair and others are calling for gold prices in 5 figures in the next couple of years, by 2014, citing elections and the Fed's QE trap. Ten years ago, in 2001, he also made the remarkable call that gold would be $1650 in 2011. He's an old guy with a track record that knows what he's talking about.

Tue, 06/14/2011 - 09:48 | 1367451 UnRealized Reality
UnRealized Reality's picture

Blah, Blah, Blah, been hearing this shit for over 2 years now. Although I'm invested heavy in Gold, this crap is very tried some.Seeing is believing, put up or shut up! Does ZH have to get out of a Gold position every time they put up this pump crap.

Tue, 06/14/2011 - 09:54 | 1367457 SheepDog-One
SheepDog-One's picture

Youre invested heavily in gold, but dont really believe in it. Ok!

Tue, 06/14/2011 - 10:03 | 1367486 LawsofPhysics
LawsofPhysics's picture

Hey, if he really is a holder of gold and people start using it more regularly, then he also better be a holder of guns and ammo.   To me, gold and silver are simply the safest store of value moving forward as it now becomes a game of losing the least.  Don't hold gold and silver if you are going to be willing to use in in the future.  The world must deal with the finite availability of numerous resources for the "modern" way of life.  Unfortunately, this is not compatible with all the "academic" models being used to plan the world economy and monetary policy.  A slow grind into inefficiency and chaos is already occurring as all things "paper" disconnect from the real world.

Tue, 06/14/2011 - 10:29 | 1367540 Jayda1850
Jayda1850's picture

Agreed, all these stories of gold going to $5000 are kinda ridiculous. If your buying precious metals to try and triple and quadruple your money good luck with that. I own gold and silver simply as a savings account. I'd rather have gold and silver sitting for 10 years than a bunch of cash sitting in the bank losing value year after year. Plus the less cash I have sitting in the bank the less money these vampire banks can make off of me. FUCK THE TBTF!

Tue, 06/14/2011 - 16:19 | 1368826 RockyRacoon
RockyRacoon's picture

...if he really is a holder of gold and people start using it more regularly, then he also better be a holder of guns and ammo.

Why would crime be more rampant in the case of PMs being used as currency?  Wouldn't the same folks be going after your $20 bills?   The lead delivery systems are a requirement, but not just for holding on to one asset.   They work equally well for anything!

Tue, 06/14/2011 - 10:15 | 1367506 UnRealized Reality
UnRealized Reality's picture

Well, well, well, ZH deleted my reply to you, I guess it's no different then Marketwatch. WOW!

Tue, 06/14/2011 - 10:16 | 1367508 LawsofPhysics
LawsofPhysics's picture

I saw that, disappointing indeed.

Tue, 06/14/2011 - 11:08 | 1367638 DoChenRollingBearing
DoChenRollingBearing's picture

FOFOA says that you do not have to believe in his Freegold idea.  Just buy the gold, and you will benefit anyway!

OK!

fofoa.blogspot.com

Tue, 06/14/2011 - 10:20 | 1367507 MsCreant
MsCreant's picture

My gold has done well over two years. I don't think yours should be different. I see, I believe. Why the anger?

Tue, 06/14/2011 - 11:24 | 1367710 Bay of Pigs
Bay of Pigs's picture

Indeed. Gold was $932 and silver $14.31 on June 15th, 2009. This poster is ADD or on drugs. Sadly, you and I have seen this plenty of times before.

On a positive note, the lows for gold and silver will be most likely be put in shortly (June/July) and then were off to the races again by fall.

Good to see you again. Hope your situation is getting better. Best wishes...

Tue, 06/14/2011 - 09:55 | 1367464 Silverhog
Silverhog's picture

Economic news still sucks but the market is roaring back on unicorn farts and free rainbow candy. I think they are trying to drive self employed folks nuts.   

Tue, 06/14/2011 - 09:58 | 1367481 buzzsaw99
buzzsaw99's picture

this rally smacks of desperation to me.

Tue, 06/14/2011 - 09:57 | 1367467 tradewithdave
tradewithdave's picture

It's just a coincidence that the $5,000 price represents a 1% reserve of a $50 gold buffalo coin and that this would provide target parity for the renminbi.  Nothing to see here... move along.

There's also no relationship between this "gold dust" accounting methodology and the raids on KITCO et al.  The Sorcha Faal/Strauss Kahn disinformation leak was also completely unrelated to this.  The answers to Ron Paul's questioning of the Fed a few days ago about their "paper claims" on the Treasury's gold are also completely unrelated.   

http://tradewithdave.com/?p=6916

http://tradewithdave.com/?p=6704

Dave Harrison

www.tradewithdave.com

 

Tue, 06/14/2011 - 11:08 | 1367640 LawsofPhysics
LawsofPhysics's picture

Dave, could you provide more information on precisely what "lines of credit" this guy is taking about in the video when he refers to the 75% not being used?

Thanks

Tue, 06/14/2011 - 09:55 | 1367472 oogs66
oogs66's picture

it's a slow day when a $5,000 gold story attracts so few comments

Tue, 06/14/2011 - 10:39 | 1367563 tmosley
tmosley's picture

The trolls are all dead.  New ones are waiting on the front porch.

Tue, 06/14/2011 - 10:49 | 1367593 LawsofPhysics
LawsofPhysics's picture

New trolls on the front porch everyday, it looks like this next crop of trolls is holding something called a "bitCOiN".  

Hey, at least they figured out that in order to get "rich" in a ponzi, you need to be one of the first one's in the ponzi.  I'll give them that much credit.  

Tue, 06/14/2011 - 11:10 | 1367649 DoChenRollingBearing
DoChenRollingBearing's picture

The trolls will be back.  

I am curious about this Bitcoin business as well, and will look into it as soon as I can convince my lazy ass to do it...

Tue, 06/14/2011 - 12:31 | 1367968 tmosley
tmosley's picture

From the wiki article, it seems to me that it is EXTREMELY vulnerable to lack or interest or participation.  Basically it is a forced low inflation fiat currency that can't be corrupted by people (supposedly).  The thing is, it's still monopoly money.  If people pile into it, great.  But there is no real reason for them to.  It doesn't have a history, and it is hard to understand.  Gold is easy to understand, and has a very long history.

It might appeal to the Freegold crowd, as it would be a transactional currency that would have a strong check against hyperinflation (ie there is no-one using it as a tool to steal purchasing power), but there is still nothing to stop people from transacting directly in gold, and once that train starts rolling, there will be no way to halt the hyperinflation as everyone tries to get rid of their bitcoins for gold or other goods.  It might work for a while, but when you have the possibility of electronic gold transfers, there is no need for any other form of currency.

Tue, 06/14/2011 - 16:00 | 1368761 suckerfishzilla
suckerfishzilla's picture

If Bitcoins are as fun as the keno slots at the casino I might give them a whack.

Tue, 06/14/2011 - 11:36 | 1367787 jomama
jomama's picture

still waiting for $1600...

Tue, 06/14/2011 - 10:02 | 1367476 mmlevine
mmlevine's picture

All such bullshit - the only thing that matters is here the algos want to take it. Face the facts. Analysis is now totally worthless.

Tue, 06/14/2011 - 09:59 | 1367485 TideFighter
TideFighter's picture

Gold will be what They want it to be, nothing more and nothing less. They could announce copper as the new monetary standard, and set copper at 5g's per ounce, and your pennyless! This ain't '49, and you ain't digging it out of the ground for free. Whatever you do, better than anyone else, is what you leverage. Sitting there waiting for Au or Ag to go to some arbitrary number is mindless. Read some books, better yet, write one yourself. Learn how to make clean water for storage, grow food, make lots of friends. Cash in those golden eagles and buy a .50 Eagle. If you think that They cannot control the price of gold forever, then how about some swamp land in Florida?   

Tue, 06/14/2011 - 10:10 | 1367495 Greeny
Greeny's picture

"This ain't '49, and you ain't digging it out of the ground for free."

Now picture this... FED print money and through anon

corps buying suppressed miners and then they have Silver

and Gold at production cost. Nice project for

Bernank instead of buying worthless mortgages..

But they wont do it, simply because they can set any price

for PM's by world-wide manipulation.

5000/oz Gold? I'm betting on $2000 and not tomorrow but

maybe in 2-3 years. We'll see.

Tue, 06/14/2011 - 11:23 | 1367611 anony
anony's picture

meh

Tue, 06/14/2011 - 10:58 | 1367614 anony
anony's picture

I can't reconcile 'making lots of friends' with the fact that 'hell is other people'.

And D.C. is built on a swamp, in case you haven't noticed. The R.E.  market in that high-priced slum is at record levels while the rest of the world is in the toilet.  Growth in government has been berry berry good to the landowners and lessors in that hell hole.

Not that you're wrong about any of it. 

Tue, 06/14/2011 - 10:03 | 1367487 Greeny
Greeny's picture

Silverhog, your Silver much depend on Economy

Market drop will drag down Silver prices as well,

yes and Physical Silver included. So you better cheering

up green days and $USD drops, or you going to Enjoy

$10/oz Silver again like in 2008 and then wait another

5 years for $20.

Tue, 06/14/2011 - 10:42 | 1367573 tmosley
tmosley's picture

4 weeks, 6 days.

Oh hi new troll.  I thought you were all still on the front porch.

You have literally no idea what you are talking about.  Silver will never be $10.  Not physical silver, anyway.  You seem to think that all of the factors that have driven this bull market have reversed themselves somehow.  If you trade this, you will get what you deserve.  I would suggest you hang on to that refrigerator box.  You're going to need it.

Tue, 06/14/2011 - 10:52 | 1367590 Bay of Pigs
Bay of Pigs's picture

Well, this has to rank as one the dumbest comments of the year so far.

Did you change your name Math Boy?

Tue, 06/14/2011 - 11:10 | 1367672 DoChenRollingBearing
DoChenRollingBearing's picture

Kind of nice to have a new troll around.  Bay, I will leave it you and tmosley to terminate him and any new ones that pop in from the porch.

Have fun though.  Don't squish them all at once.

Tue, 06/14/2011 - 16:23 | 1368842 RockyRacoon
RockyRacoon's picture

Lemme at him!  Lemme at him!

Whose turn in the barrel is it?

Tue, 06/14/2011 - 10:04 | 1367488 the black arrow
the black arrow's picture

From 1970 to 1980 gold went up 25 times the low of 35. Roughly 850.00. Yes there were problems, mostly inflationary, but the world didnt end and the dollar remained reserve currency. So why cant it go up 24 times the low in 2000 of 254.00? Giving us 6100it all doesnt seem that impossible to me.

Tue, 06/14/2011 - 10:07 | 1367491 TideFighter
TideFighter's picture

Thanks for the batting practice fastball.

Answer: 14,000,000,000,000

Unfunded Liabilities: +100,000,000,000,000

Tue, 06/14/2011 - 10:05 | 1367492 TideFighter
TideFighter's picture

dup

Tue, 06/14/2011 - 10:10 | 1367499 GetZeeGold
GetZeeGold's picture

 

Yeah....but what's a trillion dollars worth now anyway?

 

Tue, 06/14/2011 - 10:22 | 1367519 gwar5
gwar5's picture

Central banks are printing money like crazy and clinging to gold like never before -- that's all you need to know.

If they really thought gold didn't matter, they'd kill it off by dumping what is in their vaults instead of trying to use paper market gimmicks like margin hikes.

Tue, 06/14/2011 - 13:44 | 1368201 FlyPaper
FlyPaper's picture

++   Agree.  They would not diversify out of paper into gold if they did not look at it as a better store of wealth than fiat.  

The central bankers don't like gold because you can't manufacture wealth out of thin air and charge people interest on it.  Hence they try to control gold prices - apparently with Fed/CFTC blessing (no other way to explain the lack of regulation).    The current financial system cannot stay upright without plentiful amounts of Fiat.  They don't want the current system to implode, nor do the bankers want to loose their monopoly and control of the US government.

No Fed reserve, no severely bloated US government debt - as market forces would have constrained the Govt via interest rates.

Soon it will be about 'what you have' in terms of assets, and not how much money you have.

If I have an ounce of gold today and the manipulators say its worth $1500 - and tomorrow I have an ounce the they say its $1200 - or $5000 - you still have an ounce of gold.  

When the SHTF and US$ are not accepted in trade, then we'll have to buy some other hard currency to trade in, or go to a barter system.  At that point PMs are likely back in as 'hard money.'   This reversion could be the next catalyst for confiscation of gold ("National Emergency") where they'll force you to trade it back for fiat.

 

 

 

 

Tue, 06/14/2011 - 10:29 | 1367520 Contra_Man
Contra_Man's picture

Observation Point # 1

How much physical gold bullion (in China) still remains unrecognized officially as "not on deposit", as it has not been mined and remains underground domestically (ie: Munduro Mining's pulled environmental permit MUN-t for examples) - in what both geologists and investors once coined assays as : "a mountain equivalent of underground gold"?   (Note: Presently, I believe something like only about 65 x 65 m2 has ever been physically mined in all human history.)

                           # 2

Where would you leave the World's largest known, proven, global gold currency reserve?  Especially, for safekeeping... if you were China, and you could just leave it under your feet but have it accessible anytime with a quick, open-pit mining process? 

Just a thought for the free-market, supply/demand-siders, and future price discovery crowds ...

Tue, 06/14/2011 - 10:30 | 1367546 JW n FL
JW n FL's picture
[PDF]
Draft extract from Mundoro report for China report

 - [ Translate this page ]


File Format: PDF/Adobe Acrobat - Quick View
environmental laws. In order for the project to be built as envisioned in the feasibility study, it needs to go ..... permitting process, adhering to national PRC regulations ... Metals Resources Ltd.'s Mount Gordon mine in Australia, ...
www.mundoro.com/i/pdf/MUN-prjoverview.pdf
Tue, 06/14/2011 - 10:37 | 1367557 JW n FL
JW n FL's picture

2.4m oz (ish)

2,400,000

150,000lbs

68,000kilo

Tue, 06/14/2011 - 10:43 | 1367576 Contra_Man
Contra_Man's picture

150,000 Lbs... of gold metal recovered in all of humanity.  Well Done Chaps.   Now what does that upsidedown gold mountain over there weigh?  sarc./off

Tue, 06/14/2011 - 10:24 | 1367530 bentaxle
bentaxle's picture

I've been trying to buy the dips....there aren't any F@?!!*_<g dips!

Tue, 06/14/2011 - 10:29 | 1367542 WW
WW's picture

Manipulation in the Gold market?

Always ask yourself - What does the Fed want?

Tue, 06/14/2011 - 10:38 | 1367560 JW n FL
JW n FL's picture

short term ask what the FED is going to get?

Tue, 06/14/2011 - 10:45 | 1367579 fonestar
fonestar's picture

Ultimately, these things are pointless.  There will come a time, probably soon, when any amount of your paper dollars will not buy a can of Coke, let alone an ounce of Gold.

Tue, 06/14/2011 - 10:49 | 1367585 Stoploss
Stoploss's picture

He, he, he. Dey aint no gold in fowt knox.

And dey aint no silver in da comex.

Tue, 06/14/2011 - 10:58 | 1367609 Stuck on Zero
Stuck on Zero's picture

My wife went to a gold party the other night.  Dozens of her friends brought old gold chains, jewelry, rings, fillings, and watches to be sold.  The high price of gold is drawing out huge amounts of metal from "deep storage" in closets and jewelry boxes everywhere.  There's lots of this.  When silver reached $50 an ounce in the early 80s millions of people lined up to sell their silverware, old coins, trays, and jewelry.  When the economy is as bad as it is now this source will be quite large and growing.  Will it be enough to counter production and investment demand?

Tue, 06/14/2011 - 11:03 | 1367630 TideFighter
TideFighter's picture

Then they all went to Mickey D's and bought high calorie, nutrient-less food. And a few hours later, sat on the Standard and squeeezed out a loaf. Perfect example of gold to shit ratio.

Tue, 06/14/2011 - 12:31 | 1367970 latizziforchizzi
latizziforchizzi's picture

I just thought I would post this if it has not already been posted. James Turk interviewing John Embry on gold, silver, U.S. Dollar, and other currencies...

(30 minutes)

 

 http://www.goldmoney.com/video/john-embry-interview.html

 

 

Tue, 06/14/2011 - 12:28 | 1367971 latizziforchizzi
latizziforchizzi's picture

I just thought I would post this if it has not already been posted. James Turk interviewing John Embry on gold, silver, U.S. Dollar, and other currencies...

(30 minutes)

 

 http://www.goldmoney.com/video/john-embry-interview.html

 

 

Tue, 06/14/2011 - 12:48 | 1368026 latizziforchizzi
latizziforchizzi's picture

The Obama Asministration should be all for it. They can reflect those numbers in thei next job creation reports...

Tue, 06/14/2011 - 13:01 | 1368065 rex-lacrymarum
rex-lacrymarum's picture

Tht title of the report ('In Gold we Trust') has apparently been hijacked without attribution from Erstebank's similarly titled report about a year or so ago. As to the growth in gold production and central bank buying: both are largely irrelevant to the price of gold.  N.b., I am bullish on gold too, but whether new mine production rises or falls would never enter into my deliberations - it is simply unimportant to a money commodity the entire above-ground stock of which amounts to approximately 67 times annual production. The same holds for central bank buying. Whether a central bank here or there buys a few tens of tons of gold is not relevant either. If anything it is slightly worrisome as it may represent a contrary indicator.

Tue, 06/14/2011 - 14:41 | 1368369 WilliamShatner
WilliamShatner's picture

Witness Soros selling all of his GLD holdings and a lot of his shares in Novagold and Kinross.

With GLD, he's betting that bullion prices will be flat to down for the immediate future.

NG and KGC have been laggards and will continue to be so for awhile.

He picked up shares in Freeport for continued gold exposure with more exposure to copper and shares in Goldcorp for a better miner of gold.

This is the way I see it, he's looking for the leverage the miners provide and getting away from the physical side (GLD) because the bigger producers are going to see their profits go way up as long as gold doesn't collapse back to 1000 per ounce. 

I'm in the same camp, I hold share in only producers like New Gold with low cost per ounce and I'm hanging on to more speculative explorers/developers like Pretium.  Looking to pick up long term call options on the big producers going forward.  Still going to have my physical ounces of gold for cash, but going forward the miners should start booking big profits.

 

edit: Also really like Sandstorm Gold, they are a gold streaming company headed by the former CFO of Silver Wheaton.

Do NOT follow this link or you will be banned from the site!