In the KWN weekly metals wrap, we’re looking at $1,440 as the new ceiling and perhaps $1,420 as the new floor for gold (yes, the dreaded ‘G’ word). Although last week was indeed a consolidation week, if we break through $1,440, then we’re up through $1,450 and a new ceiling at $1,460. With gold going through these $20 window breakpoints, silver appears to be going through the same logical process, but with $2 dollar breakpoints, as people abandon paper currency, particularly the paper dollar (which other paper money printers still treat as their reserve currency, even though the dollar has been backed by nothing since 1971). The new silver ceiling target is $38 dollars. Once we’re through that, then we’ll probably be up to $40 as the new immediate target:
James Turk, the proprietor of GoldMoney, is more bullish than the metals wrap commentators (as you might expect, of course). The major difference between silver and gold at the moment, is that silver is in backwardation (the future delivery prices are lower than the on-the-spot prices), which indicates that people prefer physical silver in the hand, to two birds bearing paper promises of silver in the bush. Mr Turk predicts that if gold goes into backwardation too (a highly unusual and usually extremely fleeting occurrence), then it’s all over for the dollar. Backwardation in both silver and gold will indicate a major flight of wealth into private metal (solidity) and away from government paper (junk). Turk still says he believes in $1,800 dollar gold this year, and $50 dollar silver:
Ben Davies speaks about George Reisman’s book, Capitalism (freely available for PDF download), and government price controls. Davies predicts that no matter how stupid price controls are, in an economic sense, western governments are heading towards more price controls to miserably fail to smother the paper money inflation they are creating with their printing presses.
He also talks about how the silver price has been artificially controlled, which has led to a shortage in physical silver, and therefore the current price explosion in silver as those controls fall apart (as price controls always do). Davies predicts a consolidating top for silver, at $45 dollars an ounce. He believes once silver reaches that point, then gold will be where the action is, with a breakthrough ceiling of $1,440 dollars an ounce, and then nothing to stop it rising another $400 dollars on the upside, if it breaks through that price-controlled ceiling, to match Mr Turk’s $1,800 dollars by Christmas. Interesting:
Rob Arnott speaks about the general inflationary cycle, moral hazard, and the policy blunders of central banks; he is alarmed. He also predicts that if the U.S. government keeps going with its money-printing policies, then it is heading for a Greek-style collapse. Listen out for the line about the iPad:
The heroic honey-voiced Robin Griffiths strays a teensy-weensy bit into Bastiat broken window territory, but we’ll forgive him for this possible faux pas because of the kicking he then gives Helicopter Ben. He believes it is reasonable to expect gold to hit $3,000 dollars an ounce, at some point, without a specific timeframe, though even $8,000 dollars is a not unreasonable target, if Helicopter Ben really keeps going with his prodigious money printing programme. On silver, he thinks a reasonable resting position is somewhere between $40-45 dollars, but that it should double from there within some kind of short-term horizon: