bills_fan Posted December 23, 2009 Posted December 23, 2009 Gold is going to go sky high. I would happily take the other side of that trade. Nothing goes sky high in a deflationary economy. And deflation is a-coming in a very nasty way.
Magox Posted December 23, 2009 Author Posted December 23, 2009 I would happily take the other side of that trade. Nothing goes sky high in a deflationary economy. And deflation is a-coming in a very nasty way. We'll see For years, very foolish people have been telling me the same thing you have been saying, and for years I have been telling them "We'll see" You are a fool if you don't take actions to protect yourself from the inevitable fall of the dollar.
bills_fan Posted December 23, 2009 Posted December 23, 2009 We'll see For years, very foolish people have been telling me the same thing you have been saying, and for years I have been telling them "We'll see" You are a fool if you don't take actions to protect yourself from the inevitable fall of the dollar. No doubt, the dollar will fall. But not in the next 12 months. The gold trade was profitable if you got in during the short dip following the demise of Bear and the Fannie/Freddie disaster in 2008 and are now exiting that trade. Long the dollar, short gold. Seems like a pretty good trade for the next few months.
Magox Posted December 24, 2009 Author Posted December 24, 2009 No doubt, the dollar will fall. But not in the next 12 months. The gold trade was profitable if you got in during the short dip following the demise of Bear and the Fannie/Freddie disaster in 2008 and are now exiting that trade. Long the dollar, short gold. Seems like a pretty good trade for the next few months. The dollar vs. the euro is at 1.43 today. 12 months from now the dollar vs. the euro will be somewhere between 1.48-1.55 Regarding the long the dollar, short gold trade, the majority of that move has already taken place in my opinion. I posted about a month ago that Gold would correct around $1200 an oz. and it did. I wish I could find that post. I also wouldn't expect gold to drop too much further down below $1025 an oz. Central banks are becoming net buyers of gold over the last few months and I would expect that to continue, not to mention that John Paulson is beginning a new gold fund in January and that will most likely provide a boost. The ETF's over the past week have added over 11 tonnes of gold to their holdings and that is also a sign of a looming price increase. My guess is that we will see $1300 gold by June, the only thing I see standing in the way is a short term movement in the dollar to the upside. I don't believe that the Euro will go below 1.38, if it does get that low I would be a big buyer of gold, and I'm already starting to add to my positions at these levels. $1080 I see as a good entry point. As I tell my clients, I don't claim to know bottoms or tops, but I do believe that we are nearer to the bottom than where we just came from.
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