Monday, August 3, 2015

Gold- minimum upside $2300 level which is about the 1980 high adjusted for inflation.

Gold How High is High
Your timing has been incredible. It is becoming clear that your forecasts are time and price which are separate. You have opened my eyes to a whole new way to observing the world. Do you think gold will still reach $5,000 after 2016?
Thanks so much
ANSWER: Yes. But as I have stated before, $5,000 is the extreme maximum target – not the minimum. I do not see even technically any possibility of $30,000 or some other outrageous forecast. Reaching even $5,000 will not be easy and we have to be concerned that they could simply declare gold to be illegal as they did in 1934. Government would not necessarily travel door to door to confiscate gold. They would more likely than not employ the same tactic as in the past – just outlaw transactions in gold to avoid taxes which might even include BitCoin. That would be the way they set the stage for confiscating anything that is avoiding taxation which they now call money laundering with up to 20 years in prison. This is now all about them – not you. They will never print their way out for their benefactors would not lend them money under that scenario. Hedge funds demand Draconian measures that a deflationary as they are doing to Puerto Rico and Argentina. They do not care that society will not function under austerity – they want their profits.
Such schemes against tax-avoidance would not be merely a target against gold alone. It would be against anything taking place in a tax-exempt atmosphere. This posture on their part would have the effect of shutting down gold futures. However, that would really screw the mines for they would be unable to hedge and if gold were illegal, then who buys the gold? So there would be a lot of problems making gold illegal. That does not put it past these people trying some sort of scheme. However, this reflects the problems we face as government act irrationally trying to maintain control and power rather than reform.  This is the meltdown phase of governments for they cannot look at the long-term. There is no way out of this mess without a full blown restructure. But that is a loss of power and they will never willingly do such a thing. They will kick and scream all the way.
Gold should test the $2300 level which is about the 1980 high adjusted for inflation. That target would appear to be the minimum. That requires of course maintaining a free market. We will not have the precise target for a high until we achieve the final low and see the Reversals generated from that low. So anything else is speculation rather than a forecast. We still expect the low to form on the Benchmarks as of now.
Of course the gold promoters will try to convince people that demand for physical gold will rise and that somehow will save the day. This is more of a sign that the low is not yet in place. What makes the rally from the low is NEVER a rise in demand, it is short-covering. Likewise, at the top, it is running out of fresh buyers that produces the high. You must exhaust the buyers to create the high and exhaust the shorts to create the low.
I still recommend REAL gold coins – not bullion bars or restrikes. Keep away from rare date and stay with common grade US$20 gold pieces or $10, and $5. You want coins that could at least be considered collector items. Stay far away from high grade and rare dates. Also be careful that the premium for newly minted gold coins as well as silver will rise as the price declines. This is people trying to make up for losses. Those premiums will decline at the top in prices and widen as prices decline.

No comments:

Post a Comment