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“How High Can Gold Go?" "There Is No Telling" James Grant Tells CNBC

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Gold surged higher in all currencies today which saw gold reach new record highs in euros, Swiss francs and Brazilian real.
However determined selling blocked the moves higher and prices are back at the levels that they started the day.

Today’s AM fix was USD 1,773.75, EUR 1,361.28, GBP 1,089.19 per ounce.
Yesterday’s AM fix was USD 1,760.00, EUR 1,360.33 and GBP 1,088.03 per ounce.

Gold fell $2.10 or 0.12% in New York yesterday and closed at $1,768.40. Silver dropped to $34.084 in London, but rallied back higher later in the session and finished with a gain of 0.03%.

 
James Grant Interview on CNBC

Gold is slightly higher today and is being supported by investor concerns not just about ‘stimulus’ but about “open ended” QE or ‘QE to infinity’. 

Gold and silver have this week consolidated on their recent sharp gains which is a healthy development as there were concerns that the markets were getting ahead of themselves.  


Currency Ranked Returns - (Bloomberg)

Gold has been hovering near $1,775/oz a 6 ½ month high seen after the US Federal Reserve launched QE3 and vowed to keep borrowing costs low until 2015, fuelling global demand for gold, which benefits from a low and negative interest rate environment.

Deutsche Bank has reported that their high net worth private clients have expressed an increasing interest in owning gold in order to protect their wealth from the growing risk of inflation (see Newswire).

Thursday’s US manufacturing figures showed the sector suffered its weakest quarter in 3 years.


Gold Tick (17/09/2012-Today) - Bloomberg

The recent renewed appetite for gold and silver has shot the precious metal backed funds to their highest levels in a year.  SPDR Gold Trust, the world's largest gold ETF, said its holdings had hit 1,308.41 tonnes.  Holdings in iShares Silver Trust, the world's biggest silver ETF, climbed to an 11-month high of 9,940.66 tonnes.


XAU/EUR Exchange Rate Daily, 17/09/12-Today - (Bloomberg)

Gold is consolidating near record highs in the euro and is less than 1% below the record intraday high from just over a year ago on September 9th 2011.

One of the most astute financial analysts in the world, Jim Grant, founder of highly respected Grant's Interest Rate Observer, was asked by Maria Bartiromo on CNBC yesterday “how high can gold go”? Grant responded that "there is no telling."

Grant was asked about the stock market and where to invest today and asked if “you want to get in front of this train?”

He responded by advocating “security analysis” and said that he thinks that that is “where an investment in gold and silver comes in”. 

Grant said the following:

“Central banks around the world are bound and determined -- either through actions or words to debase their currency. They're telling us”


XAU/GBP Exchange Rate Daily, 17/09/12-Today - (Bloomberg)

When asked how high gold could go, Grant astutely noted that:

“The nice thing about gold, it has no PE multiple. There’s no telling. 

Gold is a speculative -- it earns no yields, gold is a speculation on an anticipated macro economic outcome. That macro economic outcome being the systematic debasement of currencies by the central banks. 

They've done QE 3, right? The economy appears not to be in the best of health. Why wouldn't they do QE 4? What intellectual argument do they have against doing it again and again and again? 

That's one of the risks, right? Well, it's open ended already. Maybe they'd need it, because we know it's open ended. They can save the paper in the press release”.

With regard to hard assets such real estate and gold, Grant said: 

“There is an argument to be made that you want to be buying hard assets like gold, like real estate ... that's not a bad way to hedge against the currency”.

The interview ends on a funny but sadly telling note when the “Money Honey” Bartiromo says that she knows that Federal Reserve Chairman, “Bernanke knows you have been so critical. What is his answer to you, when you raise these points?”

James Grant said: 

“We don't talk any more.”

Ron Paul named Grant as his likely candidate for Chairman of the Federal Reserve to replace Ben Bernanke whose term expires in 2014.

The interview is a must watch and can be seen here.

NEWSWIRE
(Bloomberg) -- Indian Physical Gold Demand ‘Encouraging of Late,’ UBS Says
Indian demand for physical gold has been “encouraging of late” with flows this week heading for the biggest since mid-July, UBS AG said in a report.

“Volumes aren’t huge, but it’s clear that demand is quick to emerge on local price pullbacks,” the bank said. 

(Bloomberg) -- Russian Gold Holdings Fall to 30 Million Troy Ounces in August
Russia’s central bank decreased its gold holdings to 30.0 million troy ounces as of Sept. 1, from 30.1 million troy ounces a month earlier, according to a statement published on its website yesterday.

The stockpile was valued at $49.7 billion at the end of last month, Bank Rossii said in the statement. 

(Bloomberg) -- Gold Targeted by Wealthy Amid Stimulus, Deutsche Bank Unit Says
More so-called high-net-worth individuals are seeking physical gold to protect their wealth from the risk of inflation after central banks boosted stimulus, according to Deutsche Bank AG’s asset and wealth-management unit.

Mark Smallwood, head of Asia-Pacific wealth-management solutions, commented in an interview from Guilin, China, yesterday with gold trading near the highest level since February after Japan’s central bank followed the U.S. in expanding asset purchases to boost economic growth. Spot gold was at $1,770.90 an ounce today.

For breaking news and commentary on financial markets and gold, follow us on Twitter.

 

 

 


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Fri, 09/21/2012 - 14:19 | Link to Comment Negro Primero
Negro Primero's picture
"LOL: $1,500 Premium on a Rothschild Gold Turd ( And for anybody who might want to buy one of these….Give me a call, I’ve got some beachfront property in Oklahoma … I’ll give you a great deal!)"

http://www.gainesvillecoins.com/products/161604/1-oz-rothschild-and-sons...

Fri, 09/21/2012 - 14:12 | Link to Comment SAT 800
SAT 800's picture

It's an extremely stupid question; it demonstrates that the questioner doesn;t have even a kindergarten knowledge of the subject. Gold is measuring the value of the dollar. How low can the value of the dollar become; (in theory); clearly it can become zero; as stated many times by Marc Faber. Many, many, times in the past Gold has become "worth" 100,000,000 monetary papers of various kinds. There is no limit to a process that proceeds to zero.

Fri, 09/21/2012 - 14:12 | Link to Comment lasvegaspersona
lasvegaspersona's picture

I would save in anything if I had the assurances that the value of that thing would remain constant and its price would not be manipulated by the Fed. Right now gold is the best store of value and if the paper market goes away (it has to because even though the Fed has near infinite capacity to keep its price where it wants it, this process will eventually fail) it will again be the perfect vehicle. So for me , for now, I save in gold and wait.

Fri, 09/21/2012 - 14:07 | Link to Comment Peter Pan
Peter Pan's picture

How high can gold go?
It will reach its high point when its role as true money is restored and all other things are valued in terms of gold rather than fiat.

Fri, 09/21/2012 - 13:58 | Link to Comment Bartanist
Bartanist's picture

A. There is a lot more gold above ground, in the world, than people have been deluded into believing. It is a closely held secret, but for all intents and purposes from a practical standpoint the quantity is infinite, just like diamonds. The illusion of scarcity and the multigenerational dynastic hoarding of gold is what the powers that be depend on. 

B. When the price of gold goes up, it really means that the price of debt based currency is simply going down. Gold can product no income and I cannot use it other than as a currency.

Give me an asset that provides me with something I need and it will never decrease in value to me. In that context, gold is simply a yellow metal that changes in price, just like fiat toilet paper.

Whether gold goes to $2500/oz or $200,000/oz it will never provide me with anything I need and I will always have to exchange it with someone else who has something that I need and is setting the price for my gold. It is therefore a poor store of value relative to other assets.

Fri, 09/21/2012 - 14:17 | Link to Comment Peter Pan
Peter Pan's picture

Dear Bartanist,

Can I get a refund on the time I spent reading your post?

Seriously now, can you read your last paragraph again and think about what you have written?

As for the second last paragraph, even Bernanke would cringe.

Fri, 09/21/2012 - 14:15 | Link to Comment snakeboat
snakeboat's picture

saywha?  Simply put, gold is money with zero counterparty risk.  You do need money, right?

Fri, 09/21/2012 - 14:14 | Link to Comment lasvegaspersona
lasvegaspersona's picture

Bartanist

a number of sources have proven your contention to be wrong. Try fofoa's blog and search 'black gold'. If you still believe that gold is infinite...well then it is because you want tobelieve it.

Fri, 09/21/2012 - 13:38 | Link to Comment SanOvaBeach
SanOvaBeach's picture

Gold well go $5.000+ a troy oz.  Silver well break $100 an oz.  WHEN?  I might be dead when it does....................

Fri, 09/21/2012 - 13:36 | Link to Comment ebworthen
ebworthen's picture

I need a price correction so I can buy more.

Fri, 09/21/2012 - 13:26 | Link to Comment Conax
Conax's picture

PMs are facing a $40 billion-a-month headwind.  I think the entire 'stimulus' is just a slush fund to hurl into the commodities shorting campaign.  

Fri, 09/21/2012 - 14:09 | Link to Comment SAT 800
SAT 800's picture

That's not called thinking. that's called making up stories. For people who do their homework the destination of the $40B is well known and understood. Their is no Silver Shorting Campaign; this is what I call "Internet Wisdom"; your favorite guru told you his favorite fairy tale about a price suppression program and you liked the story so you signed up for the cult. It does not exist in reality. Learn how to thik. Question what people tell you; it's impossible to "control" the price of silver; things that are impossible don't happen; this is called "logic"; it can be very useful in separating the bullshit from the facts. There are no "naked shorts" in the metals market; they do not exist; people who talk about them are grossly ignorant.

Fri, 09/21/2012 - 14:24 | Link to Comment Conax
Conax's picture

Ask Andrew Maguire.   He explained it to us.

http://www.gata.org/node/8466

Fri, 09/21/2012 - 13:46 | Link to Comment backhandtopspin...
backhandtopspinslicer's picture

not sure why gold isn't below $700 then Connie

Fri, 09/21/2012 - 14:12 | Link to Comment Conax
Conax's picture

Because they are losing.  Slowly but surely, reality takes charge. They just upped the ante.

Fri, 09/21/2012 - 13:05 | Link to Comment akak
akak's picture

Fartaroma shouldn't be asking Grant how HIGH gold can go, she should more pertinently be asking him how LOW the dollar (and every other fraudulent fiat currency) can go.

Fri, 09/21/2012 - 13:56 | Link to Comment francis_sawyer
francis_sawyer's picture

you can be sure that it'll be "off it's lows for the day"...

Fri, 09/21/2012 - 12:51 | Link to Comment freedogger
freedogger's picture

"How Low Can the Dollar Go"

There, fixed it for you

Fri, 09/21/2012 - 12:42 | Link to Comment sgorem
sgorem's picture

" aaaahhhh, my precious"................

Fri, 09/21/2012 - 12:41 | Link to Comment No Euros please...
No Euros please we're British's picture

Nah, why do I need to buy gold? Here in the UK all is good, the £ is solid, right? What could go wrong.

Fri, 09/21/2012 - 13:21 | Link to Comment Son of Loki
Son of Loki's picture

 

House prices 'will fall around 20%' by 2013 (UK City Wire) House prices will fall back towards long-term averages over the next 2-3 years as unemployment continues rising and mortgage availability remains tight, Capital Economics' Paul Diggle says.

 

 

"House prices are 20% overvalued and will fall back towards long-term averages over the next 2-3 years as unemployment is set to continue rising and mortgage availability remains tight.

'We think prices will fall around 20% over 2-3 years,' said Paul Diggle, housing analyst at Capital Economics.

Diggle says this view reflects the fact that house prices remain far too high relative to earnings and the fact that he expects unemployment to rise in both 2011 and 2012 as government cuts bite.

He says 'house prices are still overvalued. The long term average over the last 40 years was 3.7 times income...." http://citywire.co.uk/money/house-prices-will-fall-around-20-by-2013/a47...
Fri, 09/21/2012 - 14:35 | Link to Comment SmittyinLA
SmittyinLA's picture

He says 'house prices are still overvalued. The long term average over the last 40 years was 3.7 times income...."

Lets apply that formula to the City of Cudahy CA (I use them because they're in the news lately, the city council was elected via voter fraud and election fixing). from the federal indictment: "Cudahy’s residents are 94% Latino and have a median income of $29,040."

$29,040 X 3.7 =$107,448.

According to Zillow the media price is $240,000 http://www.zillow.com/local-info/CA-Cudahy/r_31134/  or 140% more than it should be. 

Home prices have a lot more than 20% to drop, particularly in CA for a multitude of reasons, many of the buyers are living on govt susdidies which aren't sustainable, many of the buyers aren't paying down principal, many of the buyers committed and still are committing delusional loan fraud, oh ya and many of the buyers aren't paying their mortgages at all, many of the buyers are being "propped up" by CA "free "$100K mortgage assistance program, and will dump their unaffordable homes the second assistance is withdrawn.

 

Buy hey in the interim between now and when we "state" bankruptcy (we're beyond declaring) CA can borrow via bonds even more debt, and continue the prolific spending on Mexican invasion.

Fri, 09/21/2012 - 12:51 | Link to Comment Bastiat
Bastiat's picture

3% might be right.  The rest are afraid they might get foil wrapped chocolate.

Fri, 09/21/2012 - 14:15 | Link to Comment Precious
Precious's picture

Headline should be "Attack of the dweeb."

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