The Will Hunting Of Wall Street - "He's Wickid Smawt"
Readers of my blog are very well acquainted with Barry Ritholtz, arguably the best financial blogger on the web. For those of you who are hearing about him for the first time, Barry Ritholtz is the Will Hunting of Wall Street – a down to earth guy who is “wicked smawt”.
On December 8th, he completed this interview with Barron’s (highly recommended reading) in which he gave his outlook on the markets. He provided an outlook on various sectors, including following outlook on gold:
Has gold bottomed?
I don’t know where gold bottoms. We recommended gold for the first time in 2002 or 2003. It was strictly an inflation trade, thanks to Greenspan. And then when the GLD gold ETF first came out, we recommended that. Gold has a date with $1,500 somewhere in the future [up from $763 an ounce now], [now trading at $857]Â but whether it makes that move from 700 or from 400, I have no idea. You just can’t print that much paper and debase the currency and not see some sort of reaction.”
When really intelligent people talk openly about 5-digit gold, the commodity has moved beyond the fringe and into the mainstream. This potentially bodes very well for North American juniors…..stay tuned.
Regards,
George
[…] enough, that was the post in which Barry proclaimed “Gold Has A Date With $1,500 Somewhere In The Future” – and here we are 12 months later with gold sitting at or just below all-time […]
The price reached for oil over the summer was driven mostly by speculation not demand. As long as gold is seen as a safe haven that demand will continue to push the price higher.Uncertainty and the desire for gains will also push the price higher.I see a run on gold just like the frenzy for oil.The weakening US dollar will also have a positive effect on the price of gold.Get in now!
I’ve seen predictions on the future price of gold from $200 to $10000, that we are or will be in a deflationary/inflationary/stagflationary cycle, that the stock market will recover and flatline, that real estate will bottom and explode upwards or grind to nothing, that junior stocks will rise and juniors will implode. Honestly, no one has any idea what will happen because what is happening is unprecedented. Hundreds of trillions of derivatives have yet to unwind, which is deflationary. Hundreds of trillions of dollars to go into circulation, which is inflationary. Precious metals value drop while dollars are flooding the markets. Oil prices plummeting as the easy oil is virtually all gone, leaving only hard oil. Has the government repealed the law of Supply and Demand? NO!!!
Every damned expert out there has their heads in the sand or in the sky and are wildly predicting the unpredictable. Fundamentally, gold is valuable as a means of exchange weighed against paper assets. That is its real strength, whether you are predicting the DOOM of humankind, or deflationary or inflationary cycles. To the jackasses who say you can’t eat it, I say the obvious: You can always trade it. As long as people remain greedy, that is.
I believe Barry’s prediction was mild and appropriate. However I observe that the US paper market may soon lose its dominate position as the pricing mechanism for gold and numerous other commodities. The current problems stemming from reckless, over leveraged, underfunded financial obligations (e.g. CDFs) generated in the US, now affect most major economies of the world. The weakness of fiat based, no-reserve banking is being demonstrated, and its effects exacerbated, by opaque creation of exotic financial instruments that amount to nothing so much as wagers and promises of unknown and unimaginable scale.
The fiscal harm of the US banking and financial community has now spread across the globe. The failure of self regulation and complicit government regulators has created a lack of confidence in the current system. In just the US, Trillions of $s were “created” in just a couple of months. This reckless action has not had the advertised result and most now see that it will take many times this amount if the same poorly conceived approach is continued. The demand for gold will grow way beyond that of today.
As a result we are see historic demand for gold and silver. This demand is not being satisfied with shortages and delays reported in all corners of the world. The future will most likely see a shift to demand for actual physical gold in hand and not just paper bets on the price.
Combine the above with the unprecedented proliferation of fiat by nearly all nations destroying the confidence and perceived value of currency, and the price of gold “someday” is, conceivably, an order of magnitude greater than Barry’s number.
Are you in intensive care, and in real and present danger of flatlining? Because the whole corrupt fiat system is.
I will also die sometime in the future too! Great gold forecast.