Where is the End for Gold?
Today's Financial News - Posted November 17, 2009
Hard money maven Bill Bonner sees no end to the gold price acceleration. And it’s all about… currencies?
Bill Bonner (The Daily Reckoning):
Gold hit a new record yesterday. The price rose $22.50 to $1,139.
And we take up a disagreeable task. We ask ourselves: what if we were wrong?
If you bought gold when we first recommended it ten years ago, you are in a very comfortable position. Gold sells for more than four times as much today.
But what should you do now? And what if you didn’t go for broke on gold in the early ‘00s? Is it too late to get in on the bull market?
To give you a warning, in the following windy ambulation we come to no conclusion we haven’t come to before.
We say gold is going to the moon. If we are wrong about when… we will be delighted sooner than expected… self-satisfied… and insufferable for years. If we are right, we may have to wait a long time before saying “I told you so”.
The press has certainly noticed the bull market in gold. How could it not?
Most reporters say gold is going up simply because the dollar is going down. In the popular press, we found no other explanation.
In fact, much of the talk of gold seems to occur within articles about the dollar. We found, for example, that the dollar is at a 15-month low… and, coincidentally, gold has just hit an all-time high.
There’s something lopsided about this account of things.
If the yellow metal has hit a record high, how come the dollar is down for only 15 months and not since the Flood? Makes you wonder if the dollar isn’t the whole story.
Elsewhere, we find that the dollar is trading at $1.49 per euro.
Wait a minute.
We remember the dollar at the exact same level… was it a year ago… more? And it’s been at that same level, more or less, all the while that gold has gone up more than 10%.
It’s not the fall of the dollar that is driving the gold market, in other words. It’s something else… it’s the fall of ALL paper currencies. For when the dollar goes down, so do the rest of them – more or less.
No nation wants its currency to rise too much against the greenback.
Americans are still the world’s biggest spenders. They spend dollars… not rubles… not euros… not zlotys.
Click here to continue reading Mr. Bonner’s article.
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