Nouriel Roubini is making headlines as he claims "the gold rush is over." Here are 6 reasons why he believes gold and silver will continue down to $1,000 by 2015: [youtube]http://www.youtube.com/watch?v=8DYqoRwAk8M[/youtube] In response to his claims, KitcoNews has published two refutations of his claims, one by Vince Lanci and one by James Rickards. Enjoy! [youtube]http://www.youtube.com/watch?v=5SPDuh31jok[/youtube] [youtube]http://www.youtube.com/watch?v=Kiz2R2OGMvU[/youtube]
Roubini's claim was discussed here a few days ago (the general consensus being that he's a moron) but good to hear refutations from some more well known commentators. Rickards must drink a litre of pulp free common sense for breakfast every morning
Roubini is a contrarian indicator... and a shill http://en.wikipedia.org/wiki/Nouriel_Roubini and p.s. so there goes gold.
A lower price requires an increasing supply and/or a decreasing demand. Can the supply increase? Which current gold owners may sell? Can the demand decrease? Which current gold buyers may stop buying? What may bring new gold buyers? There are some answers to find. Central banks were a net buyer since a couple years. Before, they were net sellers for decades. Will they return to net selling? Gold ETFs, didn't exist until maybe a half decade ago. They built up a gold stock in these years and this action explains a substantial part of the price uptrend from $800 / ounce. Since december last year the biggest of these sold half the stock that they built up. 'Investors' selling AND not buying back in, has two effects: 1) they increase the supply, which pushes price down and 2) if they caused the rising price trend in recent years (which is the case here), then the trend won't continue either. In above situation, what CAN drive up the price? Simple: new buyers. What will bring newcomers that are willing to pay more? Late 2008 and in a couple subsequent years there were expectations of high general price increasings due to those Quantitative Easings. But apparently, people were able to cut spendings enough to compensate for these, and those high general price increasings didn't happen. And here we are now today, all looking at eachother, and talking about where the price will go to. Who here is now still willing to stack at $1500? If everybody thinks that someone else is, then nobody is.
If the IMF hadn't perform that 2008 buy and 2010 sell cycle, $2000 may have been the peak instead of $1900. And everything that has a production cost comparable to other products, and is voluntarely bought by people implies intrinsic value. I wonder then how Roubini defines 'intrinsic value'. Denying golds intrinsic value comes down to denying the words their existence. If gold price drops to lower levels, then the chance is 90% that it's exactly Roubini and his central planning buddies that caused it. He should well know, it's that same IMF he worked for, that bought and dumped gold from/on the market.
