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Gold Price - Where is it heading?

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The real issue with a gold standard lies in the rate at which the underlying money supply can be expanded and the limitations that places on a credit system. Deflation and modern credit systems are not that compatible, a gold standard would be constantly deflationary under any growth condition. If we really hit the wall and we are contracting or @ zero growth then I can see a gold standard being used to restore confidence in key currencies but I can't see it lasting any length of time.... western world politics and fractional reserve banking are not particularly compatible with a currency underpinned by gold.

:2twocents

JMO
 
Mr Z said:
The real issue with a gold standard lies in the rate at which the underlying money supply can be expanded and the limitations that places on a credit system. Deflation and modern credit systems are not that compatible, a gold standard would be constantly deflationary under any growth condition. If we really hit the wall and we are contracting or @ zero growth then I can see a gold standard being used to restore confidence in key currencies but I can't see it lasting any length of time.... western world politics and fractional reserve banking are not particularly compatible with a currency underpinned by gold.

:2twocents

JMO
Click to expand...

On growth, the size of the planet and the size of the population would indicate that growth may not be the way going forward.

Uncharted territory so who knows?
 
Yes, true. I have considered the prospect of a zero growth economy as being a necessity at some point simply due to the fact that we literally run out of resources. I came to the conclusion that human behavior will not change, we will grow until we hit some limit and then we will fight, the more serious the limitation the bigger the fight will be. After the fight, those left will get up and grow again, it is just what we do and have done since we started walking upright.

We are quite possibly beyond sustainable limits now, if that is true we are setting up for a brawl in the not too distant future and it will not be a small one. A scary prospect but it is a pattern we tend to follow, war tends to be a part of a commodity cycle.

:2twocents
 
Australia's gold production declines in 2011/12


10th September 2012



excerpt

-
Australian gold production decreased some 4%, or 11 t to 261 t, or 8.4-million ounces, during 2011/12, compared with the previous year, said gold mining consultants Surbiton Associates.

“The fall in production was not surprising, given the higher gold prices,” said Surbiton director Dr Sandra Close.

“However, with several new and rejuvenated projects coming on stream in late 2012, and in 2013, we should see production rise.

At the current spot price, the value of 2011/12 gold production was estimated at around A$14-billion, which Close said contributed significantly to Australia’s exports. The average Australian-dollar spot gold price for 2011/12 was around A$1 620/oz, which was more than $230/oz higher than for the 2010/11 year.
Click to expand...

http://www.miningweekly.com/article/australias-gold-production-declines-in-201112-2012-09-10
 
from the do-a-double-take file comes this:

China Recasts Gold Bars
Saturday - Sep 08, 2012, 04:25pm (GMT+5.5)
Today : Friday - Sep 14, 2012, 08:59am (GMT+5.5)

Read more: http://www.indiavision.com/news/article/business/343006/china-recasts-gold-bars/#ixzz26PpRm5po

IndiaVisionExclusive - China is busy recasting all of their gold reserves into smaller one kilo bars in order to issue a new ‘gold backed’ global currency. This is no doubt the reason for the recent trade agreements with Russia, Japan, Chile, Brazil, India, and Iran. Expect to see more nations sign new trade agreements with China in the near future.

GATA now estimates that 80% of the gold (40.000 metric tons) supposedly stored in the vaults/allocated accounts of the bullion brokerages is long gone. Clients retrieving their allocated gold have had much trouble in doing so, and when they do manage to take possession, their gold does not bear the registered serial numbers they are supposed to. One can only wonder how much of the allocated gold is now 1 kilo bars. Additionally we now read that China is interested in purchasing Gold mines.

China is well along an ambitious plan to recast large gold bars into smaller 1-kg bars on a massive scale. A major event is brewing that will disrupt global trade and assuredly the global banking system. The big gold recast project points to the Chinese preparing for a new system of trade settlement. In the process they must be constructing a foundation for a possible new monetary system based in gold that supports the trade payments. Initally used for trade, it will later be used in banking.

The USTBond will be shucked aside. Regard the Chinese project as preliminary to a collapse in the debt-based USDollar system. The Chinese are removing thousands of metric tons of gold bars from London, New York, and Switzerland. They are recasting the bars, no longer to bear weights in ounces, but rather kilograms. The larger Good Delivery bars are being reduced into 1-kg bars and stored in China. It is not clear whether the recast project is being done entirely in China, as some indication has come that Swiss foundries might be involved, since they have so much experience and capacity.

The story of recasting in London is confirmed by my best source. It seems patently clear that the Chinese are preparing for a new system for trade settlement system, to coincide with a new banking reserve system. They might make a sizeable portion of the new 1-kg bars available for retail investors and wealthy individuals in China.
Click to expand...

(.....and.....gets better, ed)

They will discard the toxic USTreasury Bond basis for banking. Two messages are unmistakable. A grand flipped bird (aka FU) is being given to the Western and British system of pounds and ounces and other queer ton measures. But perhaps something bigger is involved. Maybe a formal investigation of tungsten laced bars is being conducted in hidden manner. In early 2010, the issue of tungsten salted bars became a big story, obviously kept hush hush. The trails emanated from Fort Knox, as in pilferage of its inventory. The pathways extended through Panama in other routes known to the contraband crowd, that perverse trade of white powder known on the street as Horse & Blow, or Boy & Girl.
Click to expand...

(say no to drugs, ed)
 
Gold Standard? Don't Hold Your Breath09/06/12 - 08:36 AM EDT

excerpt

......at what price in gold would the U.S. peg its currency. Great Britain returned to the gold standard in 1925, after going off it in 1914, at the 1914 peg price. This was a mistake made by Winston Churchill (he called it the biggest he ever made) since it basically ignored the vast inflation in the British pound in those intervening years. The result was a vast overvaluation of the pound and deflation and high unemployment soon followed.

What price would a new Gold Commission set as the "correct" price of the U.S. dollar vs. gold? $1,000? $2,000? $5,000? The answer is that there is no "correct" price. Whatever price is set will eventually be tested by the financial markets and fail much as the pegged currencies system failed.
Click to expand...
 
If you can forecast what a US$ will buy, or indeed if a UD$ as we know it still exists then maybe you can have a stab at golds price at the end of this bull market. Until then numbers are meaningless, they could get responsible next year and kill this thing, they could go Zimbabwe and well then who can guess?

One notion I have in my head is that it is the holder of the new reserve currency that puts an end to this gold bull market. The final price of gold will be quoted in Yuan maybe... or ???? New USD! or????
 
Mr Z said:
If you can forecast what a US$ will buy, or indeed if a UD$ as we know it still exists then maybe you can have a stab at golds price at the end of this bull market. Until then numbers are meaningless, they could get responsible next year and kill this thing, they could go Zimbabwe and well then who can guess?

One notion I have in my head is that it is the holder of the new reserve currency that puts an end to this gold bull market. The final price of gold will be quoted in Yuan maybe... or ???? New USD! or????
Click to expand...

If they went the way of zimbabwe we would surely see unthinkable highs for gold(and silver) it would only take a small portion of US citizens to start buying when they never had before to send prices soaring. Not to mention investors jumping into the amrket to capitalise off of the huge opportunity. I imagine news would travel fast. Hyper inflation itself can move at an extra-ordinary pace.
 
As per Martin Armstrong's argument I'm not sure it is possible to hyperinflate the reserve currency without first causing some major dislocation that would end the attempt. He believes we'd end up in a war first, I think he is right. So the questions revolve around the US keeping reserve status and if not how do things change, is it peacefully relinquished or is it part and parcel of conflict? Maybe we quietly slink away from the USD, but I doubt it.

Whatever happens sticking a number on it now presupposes that things stay predictable yet gold is rising because things are less so... as such it seems a little futile to be saying now that any given number is possible or an outrageous target for gold permabulls only. :D

You didn't want the report?
 

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