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"Physical gold buying is collapsing in many parts of the world". Name one.
Your comments about the paper market are accurate, but let us not forget that we have seen a significant divergence between physical & paper prices since March. Three years ago I could buy a gold Britannia for £15 over spot: today that premium is more than £70. A certain Eric Sprott seems prepared to go toe-to-toe with the COMEX. I fear he will go the same way as the Hunt Brothers, although he seems to be approaching it without leverage: that will make him harder to de-rail. We should all wish him well if he can break the decades-long manipulation, but I don't fancy his chances.
I expect a pullback in the PM prices.....a big one. But the new ATH for gold will not start with a $2xxx. Or even a $3xxx. I'm aware that lots of people pluck prices out of the air, so let me state the rationale for my belief that gold is going to £4,000 p/oz & silver to £135 p/oz. And yes: that's GBPs & not USDs.
In the run-up to the last financial crisis to the gold price peak (2006 - 2011) gold rose 450%. Since 2013 until May last year, gold traded in a fairly tight trading range, & was clearly capped at $1,350 p/oz, having bounced off that ceiling a half-dozen times. Let's take a VERY conservative $1,000 as a base line & multiply it by 550% (which is a rise of 450%) & you get $5,500 p/oz gold. Adjust for exchange rates (again, VERY conservatively) & you can comfortably get £4,000 p/oz gold. At the same time, the GSR collapsed to around 1:30. Apply that same ratio to your new gold price & you get silver around £135 p/oz.
Can I guarantee that will happen? No: of course not, & there are plenty of people far better qualified to comment than I am, who have projections both higher & lower than that, but it's hardly an "out there" projection when we already have precedent for (percentage) moves of this scale. TBH, I'm surprised to see the GSR collapsing so quickly. I thought we'd need the StHTF before we saw a significant contraction in the GSR, so whilst it's great for silver, I feel a little uneasy that I didn't foresee it at this stage of the market.
Whilst surging precious metal prices make for an exciting (& profitable) ride, we should all remember that safe haven assets rise for a reason. We have seen really quite astonishing rises (particularly in silver) over the last 4 weeks or so. Something wicked this way comes, & I fear it is bigger & more significant than "just" a second wave of the Elite's bio-weapon.
Whilst £4,000 p/oz gold might make us all very wealthy, we must all ask ourselves just how bad a state must the world be in to justify it, & would we want to live in it (assuming we can survive it)?
GLA.
Tedjames
A total of 3 posts in gold related area. I have been trading in this are for many years.
Lesson 101 on gold. There is a physical market and a paper market. The paper market is driving the gold price and is levered about 100:1 for every ounce of physical gold. Physical buying of gold is collapsing in may parts of the globe. Physical selling of gold in recycling markets is probably now taking off and it can soon equate to 30% of the entire gold miner production. Paper gold holders will evaluate when to take profits and exit and then transfer that wealth that has not increased like gold and in fact those other assets may have deflated in price because of the pandemic. The point I am making is that inflection point could arrive any time. When paper gold markets sell the drop is very dramatic.
$2100 are you joking as a realistic gold top, are you aware that we're in a pandemic with a VERY high chance of a second wave crushing the economy. Money doesn't just disappear, it needs to move within the main four asset classes. Gold, as we speak, is 2060.11 - It's a Commodity that hedges against the stock market, known as a negative correlation. If we hit 2100 today, you'll look like a very small person. PhatStlye has linked the Article for reference, so don't start with your suspect dribble, when you, my friend do not have a clue on how investment work.
If Gold hits $2350 an ounce it will buy more of any UK asset then at any time since it came off the gold standard bar a short peak in 1980. Anyone scribing gold to go higher is suspect without a thorough credible explanation why as we have many other assets of depressed value to buy than gold. One could argue that $2100 is a more realistic gold top as huge amounts of gold above ground can be sold to buy something else (not bonds or shares). Until those other assets inflate gold is likely to hit a top.
I think the issue may be the banks could not read joined up writing. Otherwise I'm also at a loss...
We're down 6%, so it seems that the market doesn't like our drill results, even though gold is steady overnight & silver is up another 2-3% (rolls eyes).
Great article Phat, seems the share price is continuing a similar pattern. Down on good news! Very surprised that the share price is even at 166.50 when gold is so high! Ludicrous the MOST Undervalued stock of 2020.
https://www.thisismoney.co.uk/money/markets/article-8597289/Now-gold-tipped-reach-3-500-ounce-amid-stock-market-turmoil.html
AAZ £5 a share at these prices ?