Gold
to Reach Parabolic Top of $10,000 by 2012 - Yes, $10,000 by
2012! By Arnold Bock ,
07 Jun 2010
Most technical analyses of the
gold bullion and precious metals mining stocks are useless
... indeed misleading. As I see it gold and silver's parabolic
rise will coincide with future sovereign debt defaults,
currency inflation/devaluations and rampant asset price
inflation. This should happen from mid 2011 thru 2012 with
gold reaching a parabolic top of $10,000.
Not surprisingly, I have company in that
view:
- Peter Schiff told Business Week recently
that, "People are afraid of the debasement of all the
currencies. What's surprising is that gold is still as low
as it is ... Gold could reach $5,000 to $10,000 per ounce
in the next 5 to 10 years.”
- According to David Rosenberg, "There
is no doubt that gold can easily double from here. Demand
is always difficult to forecast ... but central banks bought
more gold last year (425 tons) than at any other time since
1964. (Furthermore) the supply backdrop supports a sustained
bull market, as production has fallen in 5 of the last 8
years. We know what the marginal cost curve is doing because
there is so little cheap supply left in the ground that
gold companies now have to drill as much as 2.3 miles to
get to the yellow metal in South Africa (and all Bernanke
has to do is press a button)."
THE CAUSES
1. No History
of Consequence
Gold has only been trading unencumbered
from backing fiat currencies since Nixon's 1971 decision
to stiff the French, etc. when trying to repatriate their
paper dollars for the metal. As such, there is little
history of consequence (of value) to measure market action.
2. Market Manipulation
The Commodity Futures
Trading Commission (CFTC) recently held a major hearing
which blew the doors off the bullion metals trading markets
- the "sleeper" which I predict will be viewed
retrospectively as the gold price liberation event.
We all knew JP Morgan
Chase had been manipulating the metals markets on behalf
of the FED and other central banks and this event proved
it! The hearing (specifically Jeff Christensen’s statements)
inadvertently confirmed that trading has been occurring
using naked shorts/no hedging and that there was little
bullion (only about one ounce of metal for 100 ounces of
a trade) backing up such trades should the holders ask for
it rather than cash or roll their futures into other futures
paper. This revelation was much worse than even critics,
such as the Gold Anti-Trust Action Committee (GATA), had
expected.
3. Insufficient Physical Inventories
It seems that the Asian
and Mid East buyers and owners of bullion have been removing
gold from the "normal" bank and bullion dealers
vaults and taking it "home" thus leaving much
less than previously thought in the London and New York
and Toronto vaults. A case in point is that of a major metals
investor in Toronto who finally got to view his stash of
metal in the Scotia Macotta vault and noted that there wasn't
nearly enough metal to back up his certificates, even though
he was paying storage and all kinds of other fees on his
metal.
The above begs the question: “Do these
large ETF bullion funds actually have any or much bullion
at all?” The answer is clearly that they do not and
that, in the near future, when some serious speculators
from Asia, Russia and the mid-East get their acts together,
they will force the issue.
THE EFFECT
The revelation that there is insufficient
physical inventory to meet this new demand for physical
ownership of the actual bullion (i.e. show me the money!)
is about to blow the price lid skyward.
$10,000 per ounce by 2012
This should happen from mid 2011 thru 2012
and I wouldn't be surprised to see a US $10,000 per ounce
top during this period!
The 2008/2009 crash originated with the
financial institutions which governments bailed out. This
time there is no institution - certainly not the IMF - to
bail out the governments. Gold and silver metals and mining
shares (the new Homestakes) will be the clear winners.
Conclusion
Call me nuts; assume I do too much reading;
assume I don't have access to appropriate reality checks;
assume what you want - but I am increasingly confident that
the fundamental realities of fragile sovereign debt, market
manipulation, insufficient physical supply and the need
for a safe haven investment refuge, will drive precious
metals particularly, and commodities generally, dramatically
higher in the not too distant future.
Get yourself positioned to take
advantage of this once in a lifetime ride.
