Gold and Natural Gas - Similarities?
Nahhh...
tocqueville.com
By: John Hathaway
Very good read. Not sure if it's been posted here before.
Ties the new economy, the over-owned US $, over-owned US equities, the surge in banking derivatives, the trade deficit, high oil prices yet lack of exploration, California energy crisis, and benign inflation #'s (during Clinton) and the higher #'s under Bush all together in one concise article.
Now that's a mouthful.
I like the conclusion...
Central bankers will not sell and/or lend gold indefinitely. Real interest rates, the principal hurdle for gold, are declining. A weak stock market and economy promise to push real interest rates into negative territory at the same time commodity prices break out to unprecedented levels. Political pressure will influence central bankers to validate high prices with ever-faster money creation. As stagflation returns, central bankers will shift in herd like fashion from gold sellers into gold hoarders. They will realize, too late in the game, that their extensive gold lending operations were ill advised. Low prices have eviscerated the gold mining industry. Few producers are generating profits and exploration budgets continue to shrink. Production will begin to decline within the next two years, and precipitously within four. Even substantially higher prices will not increase supply for several years. As with gas, substantial new supply is years away. Chalk up a big loss for the derivatives players. If the natural gas price can spike from $1.50/mcf to nearly $11 in two years, and then settle out at more than $5.00, surely a four digit gold price in US dollars seems plausible.
Sounds not too dissimilar to the oil patch back in '98. |
