What Are The Fundamental Indicators For Gold To Hit $5,000?

July 6, 2011 - PRLog -- Consolidation of public debt is apparently not up for discussion. The essential, deep cuts are becoming postponed, and also the policy of “muddling through” continues. A painless therapy doesn't appear to exist. We think that gold is an efficient medicine.

Both fear trade and adore trade are the driving elements of this bull marketplace. The fear component is driven by the negative actual interest rates, the excessive government debt, and also the rising fear of a collapse of the program. This component is presently regarded as the only reason for the gold bull marketplace. Nevertheless, this perspective disregards China and India that are the driving forces on the demand side. The high conventional gold affinity and also the rising wealth will support demand in the long run. By 2020 emerging markets will create 50% of global GDP, up from 19% in 2000. The majority of the emerging nations are substantially keener on gold than the industrial nations are. Most fantastic main bull markets last longer and carry farther than the majority of investors (even the bulls) anticipate. Go to http://www.silverdollar.cc for more profitable silver and gold tips.

Gold has been ridding itself of its reputation as a “barbarous relic”, emphasized in the1980s and 1990s, and will ultimately turn into an own investment class once more. The paradigm shift certainly has psychological factors. The unshakeable myths and misunderstandings (gold doesn't pay interest, the buy of physical gold is costly, gold is speculative and volatile…) are presently topic to demystification and reassessment. Given that following the bear marketplace that lasted 20 years many such arguments, defamations, and convictions ended up sticking in people’s minds, achieving a alter of mind is tedious and time-consuming. But the exact same (alleged) killer arguments are still becoming brought forward, as well as Ben Bernanke is “confused” about the rising gold price and doesn't comprehend it.

The reality that not many marketplace participants actively participated in the last high of the gold price in the 1970s is really a positive aspect. This is most likely also why the majority of investors still doubt the sustainability and justification of the bull markets even though we're in its tenth year. In the 1970s it was an unwritten law to invest a minimum of a fifth of one’s portfolio in gold. Go to http://silverdollar.cc for more profitable silver and gold tips.

Gold, as antagonist of uncovered paper currencies, remains an outstanding hedge against worst-case scenarios. Low actual interest rates and high counterparty risk provide the ideal environment for gold. Both are clearly the case at the moment, and we anticipate this scenario toast. At the present actual interest rates, gold is an obvious option to short-term government bonds, present accounts, or time deposits. Following many years of a chronic low-interest-rate policy, we don't think that interest rates, along the lines of Paul Volcker’s, could be feasible with out the program collapsing. Consequently this time the gold bull marketplace ought to end for various factors than at the beginning of the 1980s. CLICK HERE to Check Out Silver, Selling Gold, Trade Gold, Invest In Gold, Investing In Gold & Silver Now! http://www.silverdollar.cc/Selling-Gold/  

We think that the saving efforts of the US government constitute lip service of the purest water, given the imminent presidential elections in 2012. Due to the elections and also the tepid economic growth a brand new edition of the Quantitative Easing scheme ought to not be ruled out (following an “observation period”). In order to handle the present difficulties in the monetary sector but also in the actual economy the Fed and also the ECB will probably be forced to maintain the interest rates at (historically) very low levels. Negative actual interest rates and also the gold price have traditionally had a very powerful correlation. Consequently we think that gold represents the important basis of a portfolio, particularly in the present fragile environment.

“If you do not trust gold, do you trust the logic of taking a pine tree, worth $4,000-$5,000, cutting it up, turning it into pulp, putting some ink on it after which calling it one billion dollars?"

Further pros:
- The global reflating policy will continue
- Global USD reserves amount to about USD 5 trillion; the need for diversification is enormous
- De facto zero-interest rate policy in USA, Japan, and Europe
- The central banks have changed their attitude towards gold
- Investment demand will stay high; Wall Street has discovered gold
- Commodity cycle has a long way ahead- Geopolitical environment still fragile
- Chinese central bank desires to increase its gold reserves.

Cons:
- Gold is frequently held as ultimate reserve and cash of last resort and is therefore liquidated in extreme monetary situations
- De-hedging has practically come to an end. Futures positioning fairly neutral; open interest indicates negative divergence
- Greece, Portugal, and Italy hold fairly sizeable reserves and might (have to) sell them
- A slump in economic growth would certainly have a negative impact on the gold price
- Double dipping: recessions are usually not a great environment for the gold price.

Now would seem to be a perfect time to invest in gold for your portfolio to protect your assets.

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