Where is the GOLD price going?
This is a question on many people's minds over the past few days. We have seen a massive rally in the gold price over the past few months and this has been taken quite lightly as of late. It was regarded as a huge milestone when the price went over USD 600 an ounce but since then people have been expecting it to continue onwards and upwards without paying much attention to how high it actually went! This is very dangerous and I do not want to take a side. Neither do I believe that it is out of pure coincidence that the price reached where it is currently, nor do I believe that the price will hit the USD 1000 mark by the end of the year.
It is my personal belief that the rally needed a good solid correction before it could gain momentum once more. To keep it simple, I was close to suggesting to a friend of mine that we should perhaps sell when it gets near the USD 700 mark (I got it a bit wrong but not by much) but I would find it very difficult not to buy if the price falls below the 580 mark once again.
A brief thought about SILVER as well:
A friend of mine had suggested to me that the price of Silver would reach USD 15 per ounce sooner that you would think. That was about 2 years ago and as it turns out, he was right! It did, but it tumbled down again in a very abrupt fall to about USD 12 where it is currently trading. It had also fallen below the USD 12 mark in morning (European) trading. When the price had hit the USD 15 mark, I congratulated my friend on being so right and reminded him that the price was just below USD 7 at the time (in mid 2004)! He said that he would not consider selling for anything below USD 50 a point which I found to be a bit extreme myself. I had said at the time that USD 15 would be a good price at which to sell (not expecting a falling market at the time) so that you can materialise some of your profits (as we all know, precious metals don't pay out a dividend or interest).
To summarise:
I would be a buyer of Gold at USD 580 and a buyer of Silver at a price of about USD 10.5. If we were to reach these prices, I would set a target price of USD 700 for Gold and USD 14 for Silver in the short to medium term.
Side-note:
As the US Dollar strengthened a little today I thought I should mention that if this continues for a few days more and the USD/EUR rate were to go back to 1.25, I would use this opportunity to get out of the USD for good. In my opinion these rates will be difficult to find in the months to come! The US budget deficit was already priced into the rate but so was the high interest rate differential and with EUR rates set to start increasing soon, it seems inevitable that we will reach the 1.33 mark pretty soon (before the year is finished).
Lastly:
The heading for this post is also a link to Kitco.com. I find that their site is highly regarded and provides some good information as well as almost real time prices!
With this thought I leave you for today...
It is my personal belief that the rally needed a good solid correction before it could gain momentum once more. To keep it simple, I was close to suggesting to a friend of mine that we should perhaps sell when it gets near the USD 700 mark (I got it a bit wrong but not by much) but I would find it very difficult not to buy if the price falls below the 580 mark once again.
A brief thought about SILVER as well:
A friend of mine had suggested to me that the price of Silver would reach USD 15 per ounce sooner that you would think. That was about 2 years ago and as it turns out, he was right! It did, but it tumbled down again in a very abrupt fall to about USD 12 where it is currently trading. It had also fallen below the USD 12 mark in morning (European) trading. When the price had hit the USD 15 mark, I congratulated my friend on being so right and reminded him that the price was just below USD 7 at the time (in mid 2004)! He said that he would not consider selling for anything below USD 50 a point which I found to be a bit extreme myself. I had said at the time that USD 15 would be a good price at which to sell (not expecting a falling market at the time) so that you can materialise some of your profits (as we all know, precious metals don't pay out a dividend or interest).
To summarise:
I would be a buyer of Gold at USD 580 and a buyer of Silver at a price of about USD 10.5. If we were to reach these prices, I would set a target price of USD 700 for Gold and USD 14 for Silver in the short to medium term.
Side-note:
As the US Dollar strengthened a little today I thought I should mention that if this continues for a few days more and the USD/EUR rate were to go back to 1.25, I would use this opportunity to get out of the USD for good. In my opinion these rates will be difficult to find in the months to come! The US budget deficit was already priced into the rate but so was the high interest rate differential and with EUR rates set to start increasing soon, it seems inevitable that we will reach the 1.33 mark pretty soon (before the year is finished).
Lastly:
The heading for this post is also a link to Kitco.com. I find that their site is highly regarded and provides some good information as well as almost real time prices!
With this thought I leave you for today...
posted by Private Banker at 5/22/2006 09:28:00 pm
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