I was thinking in terms of advertising jewelry.
As far as goldbugs seeing gold as always too cheap, since gold has cycled to $400-$500 several times since 1979, I think the expectation of goldbugs is to see another cycle back to these levels. I think the reason some say $600 or so should be the price at some point merely takes into account deterioration of currency over the past number of years.
It's like milk prices here in Wisconsin. At $9 a hundred weight (comparable to $250 gold) the farmer gets reemed and if the farm has any debt, the farmer may even go under if the price stays there too long. At the top of the range, $19.50 a hundredweight (comparable to maybe $575 gold) the farmers are raking it in. But after a few bad years, drought, hail, tornado, etc, maybe they have a few good years coming?
I know of one farmer who hedged all his milk production just before a $5 rise. So hedging isn't the total answer. If the price moves your way on the hedge, the milk plant will suddenly find less milk fat in your herd's milk and screw you that way.
Some people believe that the producer cutting production is manipulation, but I can't see it. If cutting production is manipulation, than any company not feeding its product at full tilt is manipulating. But that's not true. The company has to determine what the demand for its product might be and produce accordingly. Otherwise the shelves will be loaded with goo-goo clusters or Jack the ripper dolls or whatever the day after Halloween and have to take a loss on liquidating its merchandise. Shareholders would call that dumb.
Farmers here in Wisconsin have overproduced their potato crop to such an extent that a 10 pound bag has gone as low as a dollar in the local stores. These producers do not owe it to consumers to produce below the profit level, so if they decide to tighten supplies, it's merely a smart move.
Japan is a case where they dumped their products at full bore on our markets here in the US, subsidized the losses their companies were taking and built up national debt. Now was that smart?
Gold may seem expensive to some at $300, but gas seemed expensive to me at $1.09 not so long ago, but after a couple of years at $1.75, $1.09 doesn't look so bad. There will be some resistance on buying on the way up, but after a time, even this luxury, gold will internalize a 30% rise. All IMVHO of course) |
