Loading ...If he could really tell the future he wouldn’t be peddling subscriptions…
Here’s his 1999 call:
There is most likely the typical summer rally from a June low that may yet develop. The public funds are all quite aggressively short and a rally is starting to appear overdue where a retest of $275-280 may be likely. Nevertheless, the prospects for lower prices into next year remain quite strong, where a drop to just under $200 performs a retest of the 1974 high.
The bullion trade has tried to use Y2K as a reason to rush out and buy gold. The central banks have been the sellers into that retail consumer demand as well. Even the British are now running advertisements offering new gold coins struck for the millennium. Some of the bankers have expressed a fear that the hype over Y2K that has been used by some bullion dealers could prove to be quite damaging to retail demand next year. The concern remains that a sharp drop in demand could unfold when the public sees that the banks have not collapsed and that life goes on.
There is also a growing fear that perhaps net sales by the public may also emerge causing prices to decline even further. Those banks that are selling gold to the public do NOT want to see a price collapse. They naturally want to sell gold coins at the highest possible price, as was the case with Australia.
We can entertain conspiracy theories and blame or threaten everyone who has ever uttered a bearish word about the precious metals, but this will not change a thing. It is going to be a very difficult period ahead for many involved in the precious metals and most other commodities as well.
Nonetheless, the only hope will be new lows in 2000 and a return to inflation perhaps due in part to Y2K. Any disruption to supply will cause a shortage of goods and that is price inflationary as was the case during the late 1970s.
If there is no serious problem and the stockpiling of goods and raw commodities by manufacturers going into year-end results in excess inventories, then there will be a risk of a further deflationary trend into 2002- 2003. Such an outcome would prompt further deflation and postpone any bull market in commodities until the 2003-2007 time period. These are major economic issues that will take time and patience to resolve.
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A PRO TRADER AND GATA SUPPORTER ANSWERED HIM:
All equity markets need to be free from manipulators of any kind. As you may have picked up on, I do support the GATA cause because I believe that these markets are being manipulated. And contrary to your belief of free markets, the gold market does not fall within this definition. Free markets are not markets where governments announce the sale of 415 tones of gold prior to the sale just to cap a suspected recovery. Sales such as these are politically motivated and not market motivated. The Bank of England had years to make it’s decision to sell 400+ tones of gold, when prices were much higher. They had as much power then than they did now to make the decision to sell their central bank gold at much higher prices. So why now; why at the $290/oz instead of $390/oz; and why was it coordinated with the known proposed IMF gold sale. Sure sounds like manipulation to me. So, maybe you don’t buy that little coincident. Try this one. Free markets are based upon one buyer, one seller….all is in balance. The demand should not exceed the existing supply and price fluctuates accordingly. But, if you lend gold to a trading partner and they sell it into the market without offsetting it against a future contract, you have in essence created supply where none existed before (because the gold has to be returned to the lender). Therefore that sale is manipulating the price artificially. This is why the price of gold can continue to fall in an environment where the demand continues to outstrip the supply year over year. Eventually, the world runs out of unassigned gold and the day of reckoning prevails. This kind of market manipulation leads to extreme price swings of unsettled and uncontrolled markets. If it were just central banks selling gold into the market (a one way transaction), it would not be considered manipulation. However, these are two way transactions where gold is lent out and then sold into the market with hopes of some future gold cover. But this can not happen because supply has been created where none existed before and demand has consumed the existing supply. This is manipulation of a free market because there is no possible way that the short position can be covered by willing holders of the metal…ergo…the market collapses and the perpetrators go bankrupt and the market purges itself of the abusers. Once again the market returns to balance, but only after the write off of the artificially created supply.