Will Gold drop to $1050 or $700 USD by mid 2021

Discussion in 'Gold' started by openeyes, Mar 31, 2020.

  1. 66rounds

    66rounds Well-Known Member Silver Stacker

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    Has to do with the oil war. They need to maintain sufficient foreign reserves to ride this out. Hard to do when your central bank is stacking harder than JLG
     
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  2. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    $1050 gold and $8.50 silver is certainly possible, I'm actually expecting a pull back, but for silver especially, $8.50 may only exist in paper as there is no physical due to mines in Mexico and South America will be shut due to virus devastating the region - just read what's happening in Equador - https://www.cbsnews.com/news/ecuador-bodies-streets-guayaquil-coronavirus-covid-19/

    2008 was a financial crisis, which was followed by deflation, but the corona virus pandemic is more like war - shortages of everything and massive food inflation and price gorging. The circumstances are different.
     
  3. 66rounds

    66rounds Well-Known Member Silver Stacker

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    I think $11 was definitely the bottom for silver.
     
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  4. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    Probably so, but also depends on the stock market. I noticed that silver correlates with the stock market in recent 2 years. If stocks meltdown again, silver will fall, but like you say, it may not fall back to the previous low. If it falls again, I'll just load up more SLV.

    http://www.24hgold.com/english/statistics_and_data_detail.aspx?id=342580C3340
     
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  5. TreasureHunter

    TreasureHunter Well-Known Member

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    WHERE and WHEN did which institution from Russia announce that?
     
  6. heartastack

    heartastack Well-Known Member Silver Stacker

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    I don't get why AUD is back on a tear upwards
     
  7. Ag bullet

    Ag bullet Well-Known Member

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    ^^treasure hunter- i was being facetious
     
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  8. openeyes

    openeyes Well-Known Member Silver Stacker

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    The debt crunch should be coming our way soon-ish (in the coming few months). USD will explode higher and commodities (including gold) will drop like ... well stones.

    Not sure there will be any physical available though. Are you ready?
     
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  9. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    Yup, I'll be picking up gold miners, but my SGD will fall in another deflationary event. So should I convert some into USD?
     
  10. jultorsk

    jultorsk Well-Known Member Silver Stacker

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    Wouldn't the market be already pricing in the debt crunch though? And more importantly - wouldn't the 'commodities dropping like stones' pertain specifically to futures contracts (paper 'commodities'/EFTs and such); like we saw yesterday with WTI Crude?
     
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  11. openeyes

    openeyes Well-Known Member Silver Stacker

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    I think converting some dollars is worthy of consideration. I don't have any sense of how long this spike in the USD will last. It could be explosive although I expect it to go for some time.
     
  12. sgbuyer

    sgbuyer Well-Known Member Silver Stacker

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    I don't have much luck with USD, especially against SGD, which is very volatile against the USD, up, down, up down. Previously, whenever gold drops, USD will strengthen and will cancel out quiet a big portion of the drop.
     
  13. openeyes

    openeyes Well-Known Member Silver Stacker

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    To your second point - yes I agree it will be in the paper market - at least initially. I am not going to sell my main stack. Its a hold for my children so unless the somehow find another huge supply of silver and gold I will not change that. But most of us have some more liquid assets and these should be prepared for a major move in the USD. To your first point - there are so many aspects to this. Firstly the US governments position is becoming so big that the market is less and less representing the risks associated with those investments. Secondly the debt levels today are imho not priced into the market prices considering again the risk associated with this level of debt. It has been noted that the 2007/8 crisis was associated with around $330B of residential debt. This required something like $12T in liquidity to resolve. Today we have something in the order of $10T in global corporate debt (in USD). The amount of liquidity to resolve this is HUGE. I am regurgitating some figures I read today so don't quote me but we all know debt levels have gone up considerably since the GFC. I don't see this being priced into the market. The GFC was the same where the market underestimated the impact for quite some time. Of course I could be completely wrong. But my investments will be structured to leverage this scenario.

    Yes I also am not a big fan of currency trading. PM's and shares associated with PM's are my usual fare. Although I would note that I have take a short position on ASX:REA as I see Real Estate being substantially impacted in the short to medium term. I mean we read every day in the paper and people and companies that will not be paying their rent. There is no way you can make that into a positive for property. I am however still invested in property for long term outcomes.
     
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  14. TreasureHunter

    TreasureHunter Well-Known Member

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    How exactly/why is this going to happen? Please elaborate.
     
  15. jultorsk

    jultorsk Well-Known Member Silver Stacker

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    Great reply, thank you. Note I'm not disagreeing with you. I'm merely pondering if the US$ denominated debt crunch outside US is alleviated by the globally lower oil consumption and the low oil prices. Which would reduce the required amount of USD in the world. Just speculating. I'm no less terrified but to me the bigger risk seems to still be in Italy's banks (primarily backed by French banks, the rumours of a junk debt bank soon to be created by ECB, the 'zombie' banks and companies in Europe, and the permanently paralysed EU. To me the eurozone is the first bug in search of a windshield. Bracing for impact but not seeing many escape routes. :eek:
     
  16. openeyes

    openeyes Well-Known Member Silver Stacker

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    I think my reply to jultorsk gave some indications. But to elaborate further I will attempt although I am no expert in finance.

    Quoting from Zerohedge

    Revolutionary Times & Regime Collapse – "The System Cannot Handle It"

    “We’re looking at a commodity-price collapse and a collapse in global trade unlike anything we’ve seen since the 1930s”, said Ken Rogoff, the former chief economist of the IMF, now at Harvard University. An avalanche of government-debt crises is sure to follow, he said, and “the system just can’t handle this many defaults and restructurings at the same time”.

    “It’s a little bit like going to the hospitals and they can handle a certain number of Covid-19 patients but they can’t handle them – all at once”, he added.

    "More than 90 countries have inquired about bailouts from the IMF—nearly half the world’s nations—while at least 60 have sought to avail themselves of World Bank programs. The two institutions together [only] have resources of up to $1.2 trillion”.


    .....
    There is $11.9 trillion of U.S. denominated debt out there alone, plus the dollar float required to finance day-to-day international trade (usually held as national, foreign exchange reserves).
    ....


    As I noted in the previous post the GFC dealt with residential debts of around $300B USD. Compared to the current liabilities of $11.9T what can one say. Current liabilities are 39.67 times what was dealt with in 2007/8. All in a little more than 12 years. Truly hard to conceive of such debts and on such a global scale.

    I would also note that global trade has been significantly impacted. Shipping business is collapsing. Global business is down a lot more than is currently being built into forward projections.

    Still I do not believe the end of the USD is here quite yet. I do think there will be a substantial spike in USD demand as governments and corporate entities try to get through the current crisis. Further debts will be created and this will go on for some time. But we have a short to medium term opportunity - at least that is my thinking.
     
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  17. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

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    But the metals havent been following the stock market for awhile.
    When the markets go down gold goes up.
    It seems to have diverged in the last week or two.

    If someone thinks they will find gold for $1150 good luck! Those days are LONG gone.
     
  18. openeyes

    openeyes Well-Known Member Silver Stacker

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    If the USD dollar rises then gold will fall.
    Market collapse will push the USD up against all currencies
     
  19. JohnnyBravo300

    JohnnyBravo300 Well-Known Member

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    Theyve been dumping trillions trying to prop it up but not working.
    The dollars best days are behind now especially as the billions in bail out money hits the economy.
    Any strength they report is just fake news at this point. Strength against other falling currencies sure but that's relative.
    In my opinion of course.
     
  20. mmm....shiney!

    mmm....shiney! Well-Known Member Silver Stacker

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    USD demand:

    Screen Shot 2020-04-22 at 8.05.56 am.png

    The best thing The Fed can do is meet that demand and let the printing machines go brrrr.
     
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