How long will the gold rally go on?

Whats up with the commodities? For 8 months gold, oil and raw materials were running from one record to the next one. I think if somebody had told me that you will pay 100 $ for one barrel oil and 1000 $ for one ounce gold in 2008 I would have assumed him to be crazy. But now through the kindness of the weak dollar caused by the financial crisis we have achieved this values and especially gold seems to be the safest harbour against the crisis-ridden financial markets and inflationary threads. So I ask myself how long can we trigger this harbour ?

Gold Bars Source: http://www.wesdome.com/ In 2006 the German Professor Dr. Max Otto anticipated a Gold-price of 2000 $ per ounce in his book “The crash comes”. First of all he mentioned that in 1980 we payed 852 USD for one ounce sounds less but if you allow for the inflation you get a price of 2200 USD which is 1200 Dollar more than the current stand. Another fact is that till now we just found 135000 tons of gold on our earth. This amount had place in a cube with a page length of 20 meters, and since 1942 there had been no year in which the gold-reserves were growing more than 5 %. So the thing is that the world´s current estimated gold demands amounts 4000 tons per year. However the production capacity just amounts 2500 tons so we actually got a deficit in supply of 1500 tons a year which boosts the price. Also has to be said that the Chinese population is allowed to buy gold since 2002 which wasn´t so before, this again requires extra 36 tons every year. The last reason is that in times of a crisis the gold price always exploded like in 1971-1974 or in 1977 -1980 when it quintupled even though analysts predicted gold would keep on falling in price.

Although these facts are very interesting the current situation at the gold market should be watched very carefully, the break away of the demand of the jewelry industry (the gold-imports of India recently felled of 90 %), and possible sales of the banks of issue could theoretically cause a downward movement.

Note: Normally markets fall faster than they rise and that and the risk that they do this grows everyday so watch your gold.

March 17, 2008 | Filed Under Commodities

Written by Sören Zschoche

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Comments

5 Responses to “How long will the gold rally go on?”

PostOnFire.com on March 18th, 2008 2:22 pm

How long will the gold rally go on? | Investing | World Fina…

2000 Dollar or 600? How will the gold price continue…
abhay kes on March 19th, 2008 12:29 pm

how long will gold rate go and why,will it come down quickly.
Sören Zschoche on March 19th, 2008 1:27 pm

Sorry but I think nobody can answer this question exactly, but we got a more and more speculative rate and when the first ones will sell their shares the others will follow from fear…

greetings Sören
topinternetguides on March 22nd, 2008 12:31 am

If you look at the technical indicators gold is putting in a top is ready to reverse, or at the very least correct (drop 15 - 20 % before continuing to rally).

Take a look at this chart:http://www.tfc-charts.w2d.com/chart/GD/48

Notice how the price of gold is hitting new highs, but the MACD has been falling. This is called a bearish divergence. The same goes for RSI.

Watch the resistance areas. The price has alread cut through the 30 day SMA. IF price closes below $900 - $890 on any kind of volume, the next level of resistance doesn’t come in until around $810. Anything below $850 and it’s no longer a correction, but a bearish reversal. If you’re long gold, put your stops in around $890. If that area holds, the rally will continue
World Of Gold on April 12th, 2008 9:06 am

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