Posted 11/24/2012 17:20 (#2714546 - in reply to #2713998) Subject: Re: Mining CEO discuss future of gold market
I do not have a position in PM's. I would consider other rare earth metals as a good buy during a recession. I have a mix of cash, equities, and bonds - both domestic and foreign. The article in the Original post reflect comment from a Gold miner - who is long and wrong.
Conceptually, I like a gold. I do not, however, think it is trading in a manner that reflects a perfectly informed "independent" currency. Its pricing is at risk in expanding economies and appeals to the general public as an inflation protected asset - which it is not. John Burns brings up many good point and practical way in which price is supported at current levels. I have the opinion that it is overpriced and represents too much speculation on currency instability.
Not my image, assume the discounting is correct:
Gold is demanded by some cultures, required by some banking systems, and sought by many in times of projected instability. My underlying assumptions is - things just are not that bad and are likely getting better. Unless there is true gold demand (or disappearance) or equity values do not reflect local inflated pricing, there is no driver of gold to go much higher. The entire risk premium is in and diluted buying power is not likely to support skyrocketing prices. As far as there being a bubble - I have no proof. The price of gold might settle slowly - or simply flat line (gold will not pay earnings, unfortunately). I do not, though, want to be a buyer of tulips --- ever .