I heard two people 'call the top' on gold today. But that makes no sense to me.
The only way you can believe that gold won't continue it's march north is if you either believe that there will be no further policy measures from the fed, or that you're short gold already and you're talking up your book.
The first person I heard call the top was Jim Kramer. Kramer's lack of insight is legendary in my business, and we think he's usually good for a laugh. The 'Kramer' effect is well known and a subject of frequent humor (hows that Bears Stearns buy reccomendation working out for you Jim?) That Kramer called the top seems like a buy signal if anyhting to me.
The second guy was some ex J Aron drone that MAria Bartiromo had sidled up next to on the exchange floor this afternoon. He seemed to be pretty clearly tryign to talk up his book.
Meanwhile JPMorgan came out today and said that they believe gold can go as high as $2,500 by year end. That seems ambitious to me, and if it's true, then I mourn in advance for what the world will look like. I'm sticking with my previous forecasts. But I do think I should add that I find it very difficult to believe that this is the top.
2 comments:
When will we see the peak in the gold price? When we get people in power that are serious about defending the value of the dollar.
Gold collapsed in the 1980's in part because the Fed sent interest rates to the moon in order to pull excess dollars out of the market.
More importantly though, we had a President who pushed through tax cuts and regulatory reforms. The resulting growth rates that pushed near 8% equaled a big demand for dollars. The economy grew to catch up with the money supply.
Until there is a leadership change, I expect specie will continue its march upwards.
Personally I think talk like 'defending the value of the dollar' misrepresents the issue. The dollar rising or falling against other currencies can indicate all sorts of things both local and foreign, so I don't think that's a helpful way to think about it.
We need growth. Rapid, widespread economic growth. solve that problem and the issue of the value of the dollar will take care of itself.
Eliminate cap gains and corporate income taxes. Institute a flat tax that exempts savings and investment, and cut government spending and regulation and everything else will solve itself.
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