Gold's 'Real' Price
Whether you measure it in units of oil or industrial metals, gold’s real price (RPG) is elevated both on the long term trend and since bottoming out earlier this year. This is what happens during a cycle of economic contraction. The gold-oil ratio (GOR) is a very important component of the RPG as pertains to gold mining operations.
NFTRH used a chart similar to this to ID what could be an oncoming short term rough patch for gold sector fundamentals, for the Q4, ’11 reporting season. Lo and behold we now hear all about how these operations just cannot keep their costs from creeping upward.
Well, after bottoming out in Q1, ’12 the GOR went nowhere for a few months and turned up during the quarter we are completing this week. One wonders what might show up in the upcoming reporting season.
With this sector, there are dangers from boneheaded management to unsafe political climates. So the risks are always there. But for the short term, the oil ‘input cost’ is not one of them.
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Whistler Blowers, Insiders
I think that millions who have bought gold are going to get burned royally! Those who have bought stocks and paper gold will find that there has been manipulation and outright fraud. This will of course drive down the value of their holdings to far less than physical gold. However those holding physical gold will try to dump their gold further driving down the value of their holdings. The final act will be when a new international currency will be created. This, and the fact that governments and individuals who hoarded it will be dumping it as fast as they can ou of despeation while it still has some value left. Gold wlll be about $300 an once again but it will be $300 eroded badly by inflation by that point. Probably valued at 50-100 dollars an ounce in today’s dollars. This will be the market value of Gold as an industrial and cosmetic metal.
Where do I get my information? I don’t directly. Perhap I am a bit cynical, but I am assuming that the ubber rich, that are attempting to engineer the next stage of humanity in a single World government are trying to enter the final stages. They are attempting to break the non conformig World powers such as China and Russia as well as sapping the wealth of the rest of us.
On the other side perhaps everyone will flee to gold as a secure and stable currency in hyperinflated times. Because this has become the convention and so many people have bought into it my instinct tells me that just the opposite will take place.
“non conformig World powers such as China and Russia”? Non-conforming with what exactly?
“This has become the convention and so many people have bought into it”?So many people? Gold currently represents less than 1% of global financial assets.
Also…
“The new Basel III rules are set to make gold a Tier 1 asset for commercial banks- compared to the Tier 3 ranking it holds currently. This means PHYSICAL gold will count as capital the same as a treasury bond.”
Gold and silver “valued” in USD (in effect, the other way around) clearly show the trend: the USD will eventually reach its intrinsic value of zero. The loss of purchasing power of the USD is no less than 98% vs gold since 1913. Given the current monetary policy practised by central bankers all over the world, are you expecting this trend to magically reverse over the next few years? Can you explain how?
We will have to see the total collapse of the current reserve currencies (USD and Euro) before a new reserve currency emerges which is still a long time off. I wonder what currency you will want to hold during that transition: worthless USD, Euro, AUD, CHF, CAD, JPY or physical Gold and Silver? After a total loss of confidence in fiat paper money, any new reserve currency will have to be backed by something rather more tangible than thin air for people to buy into it again. I expect that gold and silver will have an important role to play in that respect.