Gold will touch $1500 per ounce in the next 17 months.....How? 9 SOLID REASONS FOR UPSURGE IN THIS PRECIOUS METAL.....READ BEFORE YOU MISS THE BULL TRAIN OF GOLD----BY SHAN SAEED
I have polished my commodities skills after meeting with JIM ROGERS who is the commodities guru of the global markets. I have devised strategies and reasons for Gold investors to benefit from my knowledge and expertise. Gold is a great asset for people who are rich and who want to stay rich. Gold can protect your wealth in times of uncertainity. WHY Gold prices will touch $1500/ ounce in the comming years.
I have outlined 9 bullish arguments for gold.
1. Global fiscal and monetary reflation – The world’s major economies have taken on extensive amounts of debt to keep their economies afloat. The struggles of Greece and other nations in Western Europe haven’t gone away. The U.S. has spent hundreds of billions of dollars in stimulus money and is still losing jobs. Household debt to GDP ratio is 122%. It will require $5 to $6 tillion to bring it down to 100% of GDP...
2. Global imbalances – The dollar has benefited from the troubles in other countries in its role as a relative safe haven. “Relative” is the key word – roughly $10 trillion is expected to be added to the U.S. federal debt burden through 2019 and the U.S. trade imbalances are huge. These trends stand to weigh on the dollar and support gold’s safe haven status over the longer term. Quantitative easing will further debase the US dollar which might lead to crisis and lowers the confidence level in US dollar. Fear is a depreciating asset which might hurt the US dollar in the short as well in the long run...
3. Global foreign exchange reserves are “excessive” – Global foreign exchange reserves have expanded exponentially in just the past few years, reaching $8.97 trillion in July 2010. Meanwhile, the gold reserve ratio has dropped significantly since 1980.
4.Central bank attitudes to gold – Under the current central bank selling agreement, only the International Monetary Fund has been a seller of gold. Latin American countries, who were net sellers of gold up until 2002, are now buying gold again. India purchased 200 metric tons from the IMF in the fourth quarter of 2009, setting a floor under gold just above $1,000. China has increased its gold reserves from 395 metric tons in 2001 to 1,054 metric tons as of the end of the first quarter—a 166 percent increase in less than a decade. Central banks from China, Japan, Russia, India, South America and Middle East would be the main players in the gold purchase going forward....
5. Gold is not in a bubble – Gold’s run has been slow and steady. As I mentioned last week in one of the TV interviews, we’re not seeing large price spikes that are typical with bubbles. The gold chart and trends illustrate just how different gold’s current bull run has been from previous ones. A key difference today is that we’re seeing greater affluence in the developing world, where people have traditionally turned to gold to store their wealth.
6. Mine supply is flat – World mine production is about 2,500 metric tons—roughly 25 percent higher than it was in 1990—but net mine supply is less than it was 20 years ago. Dehedging, increased scrap supply, lower grade discoveries and higher replacement costs will continue to constrain supply. We’re already seeing this affect the marketplace. During the second quarter of 2010, gold demand rose 36 percent year over year, while supply was up just 17 percent.
7. Investment demand - Investment demand in the second quarter of 2010 more than doubled compared to the same period in 2009, and accounted for more than half of total global demand. Investors bought the most gold since the first quarter of 2009, at the depths of the Great Recession. Chinese government has advised her people in Shaghai daily on 10th September, 2009 to increase investment in Gold and silver by 15% in their portfolio....Shanghai Gold exchaange is the busiest place on earth at the moment
8. Commodity price cycle – Commodity price cycles tend to last multiple decades. Going back to 1800, the shortest gold cycle is 10 years and shortest copper cycle is 14 years. The current bull cycle began in 2001. Gold price in 2001 was $ 257/ounce..did you lose or make money? Analyze your investment strategy for the long run...Get insurance of your wealth and buy Gold
9. Geopolitical environment – Historically, gold has performed well in times of strategic geo-political and financial turmoil. Gold hit an all-time high (inflation adjusted) in 1980 amid the Iran hostage crisis and the Soviet invasion of Afghanistan. Today’s geopolitical climate is also volatile given the ongoing wars in Iraq and Afghanistan and the pursuit of nuclear arms by Iran and North Korea. Sovereign Debt crisis looms in my developed countries which is scaring investors globally.....
This research piece is not an investment advice. Please execute your own due diligence before making an investment in commodities.