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Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives
SPY 689.46-0.9%4:00 PM EST
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To: POKERSAM who wrote (86202)8/31/2016 10:47:36 AM
From: Nevada99991 Recommendation

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Alias Shrugged

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Gold at $500 is a prediction with a lot of implications. Other prices being somewhat as they are gold mining would be a thing of the past. Many say that matters not due to the above ground supply but owners don't like to sell gold for less than it can be mined. The breakeven cost for gold miners is well over $1,000. Gold price declines generally stop around the gold miner breakeven point. When gold was around $1,000 at the start of the year, the gold miner to gold price ratio was the most bearish ever, worse than 1942 when gold mining was illegal in the US during WWII. Maybe things get twice that bad for miners, maybe they don't. Gold discoveries peaked in the mid 1990's and huge exploration expenditures in the 2010-2011 resulted in paltry production increases which have now rolled into decline, and will soon be in steep decline.

Central bankers have set us up for hyper-deflation, which will happen if the financial system totally breaks. In that scenario I could see gold at $500, but I think the Dow would also be a three digit number, single digit oil. I think the situation is more likely equivalent to 1976. Gold declined by 50% after its huge run from $35 to $195. It was triumphantly predicted that gold was on the way to it's true value of $1/ounce. Instead it went from $105 to $875. I guess the other possibility is that central governments and central banks really have achieved omnipotence and utopia lies just ahead. If so, there is no need for gold and $500 is ridiculously high. Time will tell.
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