Wednesday, March 22, 2006


Merrill Lynch Sees Gold At $850, 'Returns Volitile'

Market Watch has this on the trading action. "ilver futures closed lower Wednesday, retreating from a 22-year high after failing to extend a 2% gain from the prior session even as a proposed silver exchange-traded fund came closer to a launch. 'Just because the market has a [potential] new investment vehicle doesn't necessarily guarantee that conditions will continue to attract investment to the new vehicle,' Nell Sloane said."

"Silver for May delivery climbed as high as $10.60 an ounce, a level the futures market hasn't seen since late 1983. The contract then retreated to $10.495, closing down 7 cents for the session. From here, silver prices look set to test $10.65/$10.80 in the coming sessions, said James Moore, an analyst at in London.
'With the scale of fund interest already expressed,' Moore said he still believes that 'the actual launch of the ETF will drive silver prices towards $12.'"

"Gold, meanwhile, saw its April contract fall by $1.50 to close at $551.70 an ounce, its lowest level since March 13, extending their prior-day losses made on strength in the U.S. dollar. 'Softer oil/firmer dollar prices and Iran's decision to enter into talks with the U.S. will weigh on sentiment in the coming session, but physical support is likely to remain strong around $548-$550,' said Moore."

"April platinum closed up $10.30 at $1,046 an ounce and June palladium rose $7.90 to finish at $325.95 an ounce. Rhodium, a metal mainly used to clean automobile exhaust emissions, rose sharply in Europe on Wednesday to trade at $4,000 an ounce for the first time since July 1991. Free-market prices stood at $4,000/4,100, up $200 from levels prevailing earlier this week on industry buying, and some $600 up this month.

"'It is well bid now at $4,000, and there is hardly an ounce to be had,' a trader said. Rhodium has risen steadily from the depressed levels of $500 an ounce seen in 2004, and has significant upside potential, its all-time high was $7,000 in 1980."

"'One of the main factors behind the recent price rise is the lack of available material, as traders hold back their stocks in anticipation of further price rises,' Wolfgang Wrzesniok-Rossbach."

"The price advance has caught many end-users by surprise, and they have been forced to change their buying strategies. 'They did not think that it was going to go to this level. They have been living on a hand-to-mouth basis,' another trader said. Material has been difficult to secure, especially as some of the speculative longs are unwilling to make metal easily available."

"'They find longs do not want to lend it; lease rates are 14 to 15 percent, so rolling over shorts is not an option, and they (borrowers) are having to buy instead,' the second trader said."

And a reader sent this in. "Gold should outperform equities over the next few years, technical analysts at Merrill Lynch say. This is because the relative ratio of the Dow Jones industrial average to the price of gold is declining and likely will continue to do so, according to a note by analysts Mary Ann Bartels and Cam Hui, who tracked the ratio back to 1910."

"A chart in a report by the analysts shows the ratio is currently just below 20:1, down from about 42:1 in the mid-1990s. 'The long-term target for the relative ratio appears to be 13:1,' they said. 'Based on the current DJIA level of roughly 11,000, this would translate into a long-term gold price target of $850 [U.S. an ounce], or the peak set in January 1980.' They warn, however, that returns are 'likely to be volatile.'"

Kiyosaki's now a gold bug:

Who’d a thunk it??
Long time lurker here.

I'm wondering why, with all these predictions for the prize of gold at $600, $850, $1000, etc. the price isn't going up faster.

Are investors sceptical of the predictions? To me gold seems one of the best investments right now.
Welcome LA_FiatWoman,

I think it's the combination of the stronger USD and "low"`(bogus) inflation -I'm SURE it's only temporary.

I've moved most of my money into Silver, because I think it's heading for an amazing run in the short-time, I mean - really amazing. I do plan to slowely move funds back into gold. Like Dave Morgan says, there is some money to be made in playing the gold/silver ratio.. I think he's right. Any thoughts you guys?
We're still only transitioning into phase II of the PM boom -- kinda like 1998 for NASDAQ or 2002 for housing. All the metals will go ballistic in the coming years.

Silver's current strength over Gold is predominantly due to ETF expectations. PM followers know the ETF will unmask the silver deficit and rectify the ratio.

Kiyosaki's father was a gold bug. One of his web pages describes how his father told him gold was real money vs. the fake green stuff, and that he should take every opportunity to convert his money.
Thanks, TJ! I've only read one of his books, and didn't remember that he mentioned gold at all.
Thanks yankee and tj. Great input. This and Ben's housing bubble blog are amazing resources, thanks to Ben and bloggers like you.
Actually, Kiyoski's real dad was not the one who taught him about gold and money:
He writes:

"I had two fathers, a rich one and a poor one. One was highly educated and intelligent; he had a Ph.D and completed four years of undergraduate work in less than two years. He then went on to Stanford University, the University of Chicago, and Northwestern University to do his advance studies, all on full financial scholarships. The other father never finished eighth grade.
Both men were successful in their careers, working hard all their lives. Yet one struggled financially all his life. The other would become one of the richest men in Hawaii. One died leaving tens of millions of dollars to his family, charities and his church. The other left bills to be paid.",_Poor_Dad

Seems to me that Kiyosaki had a lot of disrespect for his own father. Hope his riches bring him happiness
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