Monday, November 23, 2009
What Gold Frenzy?
"'It could be your grandmother's gold or the gift of an ex-boyfriend,' said Erhard Oberli, the chief executive of Argor-Heraeus, a major refiner here that processes roughly 400 tons of gold a year. 'Gold doesn't disappear.' ... Long considered the ultimate refuge for nervous investors, gold has climbed as the dollar has steadily weakened, budget deficits have expanded in the [US] and Europe, and central banks have continued to pump trillions of dollars into weak economies, creating fears of another asset bubble that will ultimately pop. ... At a conference in New York on Wednesday, Mr. [Nouriel] Roubini described Mr. Roger's forecasts as 'utter nonsense,' saying that there aren't any inflationary or economic pressures that would drive the price of gold to $2,000 an ounce. Even the most bullish of gold lovers were surprised last week when the Reserve Bank of India stepped in and bought 220 tons of gold from the [IMF] for $6.7 billion, a sign that other central banks might move away from dollar-denominated assets like Treasury bonds in favor of the precious metal. ... 'We have money to buy gold,' said Pranab Mukherjee, India's Finance Minister. 'We have enough foreign exchange reserves.' ... 'Gold has been around as an investment for 6,000 years,' Mr. Oberli said. 'When there is no alternative, it's there'," my emphasis, Nelson Schwartz (NS) at the NYT, 8 November 2009, link: http://www.nytimes.com/2009/11/08/business/global/08gold.html.
Yes, NS, gold is "there", and has been for 6,000 years. When will the world remonitze gold? "When there is no alternative". Roubini, you are lost. Gold could easily go to multiples of $2,000 by 2017, perhaps 5-10X. Really. NS, don't speak for me. What's $6.7 billion on the world stage? Peanuts. Zimbabwe Ben can create that many dollars in five minutes!