AppId is over the quota Last year at this time the London gold fix was $1405 and
currently it is a little under $1600 so no matter what anybody says the gold
price trend has survived very well under the terrible global monetary crisis. To
all the naysayers who said it was over, I say hold on because not only is it up
but it will continue its trajectory in 2012. The unyielding fundamentals that
gold is being driven by will continue into the New Year and possibly for quite
some time after so we're probably looking at some pretty nice gold prices
coming. Its behavior has been extraordinary in spite of the massive deleveraging
sell-off in September from its $1920.50 high. It recently lowered again to
$1534.06 due to more deleveraging linked with the mounting uneasiness about the
European Union's outcome and was booed heavily by the bears but it still
manages to shine through. And it will carry on its luminosity with the basic
fundamental of debt swelling continuing as the best way for governments to ease
out of their debt. How will this occur? With liquidity injections that will buy
the debt in an everlasting disadvantageous manner. This, obviously, is not the
solution to the overwhelming debt but the United States initialized it (after
Japan) and many others have followed in suit. Japan's ticket to debt freedom
included forcing interest rates to zero and keeping them there by printing money
and purchasing bonds with this paper. Indeed, the debt level in Japan is nearing
¥1 quadrillion. If that isn't enough, their balance sheet is ¥138 trillion.
The United States' Federal Reserve balance sheet is surpassing $2.7 trillion.
The worst of the worst, though, has to be the Eurozone (which lately has
maintained center stage). Their balance sheet has evolved into an unprecedented
€2.5 trillion. And they say that quantitative easing is not the answer! So
what is occurring, then? There are those within the ECB that are supporting QE
so as to avoid another recession. It was only December when the ECB handed out
€489 billion ($638 billion) in 3 year LTROs to 523 banks within the Eurozone.
It didn't last very long and it now lives under more difficulty and eurozone
spreads have began their unfolding yet again. It was anticipated that the
institutions would apply this large amount of discounted money to buy their own
debt just as the United States' banks drilled the earnings from mortgage
supported securities sales to the Federal Reserve into US Treasuries. It all
boils down to the private sector which, ultimately, finances the government with
funds administered by the government. As the mediator of this process, the
turnover for banks is lucrative. Zero interest rates come with benefits… And
now the Federal Reserve is expected to prolong their ZIRP assistance from
mid-2013 over to 2014. And we can expect more, for sure. Look at Japan who began
with their low interest rates that were supposed to last only a bit and they
have persisted for two decades. Even the large financial corporations are
anticipating huge prices for gold in 2012: Gold man Sachs believe they will hike
to $1,810Barclays expects then to rise to $2,000, andUBS to $2,050. As long as
interest rates continue as shallow as they are, the long-term trend will be very
good for gold . Not many things are certain within the market, but the gold
price is looking to make its mark this year. Add to that the continuing debt
development, the monetary bases and central bank balance sheets, and above all,
the largely positive supply and demand tendency and what we're looking at is a
fabulous long-term trend for gold . It can only go up. Yeah! This entry was
posted on Thursday, January 5th, 2012 at 4:39 pm and is filed under Gold Price,
Gold Price Projections, Latest Gold Prices. You can follow any responses to this
entry through the RSS 2.0 feed. You can leave a response, or trackback from your
own site.
No comments:
Post a Comment