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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: macavity who wrote (41314)	11/12/2003 3:08:05 AM
From: energyplay	Read Replies (1) \| Respond to of 74559

Gold goes to 410 then comes back down - That's close to what I have been thinking - Some reasons - 1) Looking at a LONG term chart, gold spent a number of years around the $400 price. Many marginal mines & deposits become economic near that price, having marginal costs about $320 -$350 an ounce. 2) With interest rates up a bit in the UK and Austrailia, near $400 the gold carry trade comes back. Note that 1) feeds into 2) -- you can finance your mine start up costs and hedge the price far enough ahead to make sure you can get your money back. 3) Lots of long term gold bugs have been holding from BEFORE gold was at $280. These guys (mostly guys) need to take some off the table to pay bills, divesify, etc. $400 has been a near term target for a number of gold bugs. Beyond that, target prices range from $500 to $2000 and up, but seem to require some real inflation and economic crisis to get to those levels. 4) The FED and other central banks know that gold heading much above $400 would attract the wrong type of attention, and they will sell gold to push the price down, and also pull in the money supply a bit. A $400 gold price also means that the deflaion threat is over. The gold bugs also know that $400 is likely to lead to some cental bank action.