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Gold Supply Likely to Swamp Demand (prediction of price drop to $550 by 2007)
TheStreet.com ^ | 10/29/2006 | Simon Constable

Posted on 10/29/2006 9:36:19 PM PST by Proud_USA_Republican

An increasing surplus of bullion relative to demand could mean bad news for gold bulls, if the predictions of a new report prove accurate.

Although the supply of gold looks set to drop by 159 metric tons for 2007, demand will plummet even faster, lower by 313 tons when compared to revised estimates for the whole of 2006, according to a new study scheduled for publishing Monday morning by Fortis Bank. The report was authored by a team of analysts led by veteran gold market watcher Jessica Cross, CEO at Virtual Metals, a London-based specialty consulting firm.

Gold prices will likely fall to $580 an ounce by year-end and then to around $550 in 2007, says Matt Turner, commodities analyst at Virtual Metals and a co-author of the report. "A lot will depend on the dollar," he cautions, noting that a weaker greenback could bolster prices.

Turner's forecast compares with a spot price of $596.25 an ounce recorded Friday afternoon by the London Bullion Market Association and a multi-year high of $725.25 reached May 12. Many highly respected gold analysts who have been calling for a fall rally beyond the May high, and perhaps even above $800, may find the new report sobering.

(Excerpt) Read more at thestreet.com ...


TOPICS: Business/Economy; News/Current Events
KEYWORDS: bullionprice; gold; goldbugs
Potential pain for the goldbugs in 2007.
1 posted on 10/29/2006 9:36:22 PM PST by Proud_USA_Republican
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To: Proud_USA_Republican

Lol!


2 posted on 10/29/2006 9:39:46 PM PST by Anti-Bubba182
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To: Proud_USA_Republican

No way. Gold and Silver go a lot higher over the next 5 years. Mark this post and come find me in one of the Clinton Re-education camps.


3 posted on 10/29/2006 9:40:43 PM PST by samadams2000 (Somebody important make....THE CALL!)
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To: Proud_USA_Republican

buy dollar sell dollar buy oil sell oil buy oil

“There is only one side of the market and it is not the bull side or the bear side, but the right side.”

Jesse Livermore quote


4 posted on 10/29/2006 9:41:31 PM PST by Flavius (Qui desiderat pacem, praeparet bellum)
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To: Proud_USA_Republican

Buying opportunity! Buy Gold! Buy Gold! Buy Gold! ;-)


5 posted on 10/29/2006 10:45:23 PM PST by glorgau
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To: Proud_USA_Republican

"A lot will depend on the dollar," he cautions, noting that a weaker greenback could bolster prices."

NS Sherlock.


6 posted on 10/29/2006 11:53:32 PM PST by jwh_Denver (Tagline in the oven, browning)
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To: Proud_USA_Republican
You can sell gold if you want to, but with all the whack jobs in the world, I wouldn't do it.

Just for example, let's suppose the Iranians try to test a nuke and Israel nukes Iran's enrichment sites (you will have to use nukes to get them all, and in several locations). What do you think the price of gold will be then? Even $700/ounce will be in the far rear view mirror!
7 posted on 10/30/2006 2:10:22 AM PST by Herakles (Diversity is code word for anti-white racism)
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To: Herakles

You mean like the huge run-up during the first gulf war? Wait - never mind. Really, for a currency of last-resort gold hasn't done much, considering the number of destabilizing world events of the last 20 years. Lead, zinc and copper have really gone up percentage wise as of late, however.


8 posted on 10/30/2006 2:17:19 AM PST by Freedom4US (u)
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To: Proud_USA_Republican

This can't be true. A guy on the radio keeps telling me that gold is going to $2K per ounce very soon. The only thing I don't understand is why is he so eager to sell me the gold he owns just before the price skyrockets?


9 posted on 10/30/2006 2:24:01 AM PST by Fresh Wind (Democrats are guilty of whatever they scream the loudest about.)
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To: Proud_USA_Republican
I'm a firm believer that the only precious metal worth investing in is tin foil.
10 posted on 10/30/2006 2:24:59 AM PST by Reform4Bush
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To: Proud_USA_Republican
Demand will decline faster than that, however, with a rise in jewelry fabrication (up 47 tons) and electronics manufacture (higher by 31 tons), being overwhelmed by weaker ETF off-take (down 108 tons), zero central bank purchases (a decline of 100 tons) and a fall in de-hedging of 186 tons. Other uses, such as for making coins, will be approximately 3 tons higher.

ETF demand is the big unknown and will clearly swing the market as the speculators get in and out. But the net zero central bank purchases is laughable. The gold bears have been talking that up for years and it hasn't happened. Here's a sampling: http://www.mineweb.net/gold_silver/251943.htm

Gold sales by signatories of the Central Bank Gold Agreement (CBGA) fell short of the annual 500 tonne quota at 393 tonnes at the end of the second Agreement year on 26 September. Sales under the remainder of the Agreement, running until September 2009, are unlikely to reach the annual quota of 500 tonnes for the full five year Agreement period, GFMS, a leading source of information on precious metals said in a statement.

The next paragraph has the standard gold bear disclaimer: Barclays Capital, though, does not concur, suggesting that the full sales quota may have been realised, but the figures did not appear in the statistics as they were forward sales.

11 posted on 10/30/2006 2:39:34 AM PST by palmer (Money problems do not come from a lack of money, but from living an excessive, unrealistic lifestyle)
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To: Proud_USA_Republican

The gold people sometimes seem to miss that, like oil, when the price goes up, the profit from exploration and extraction increases, which increases the supply of gold. But unlike oil, the uses of gold aren't increasing exponentially, since a lot of it just sits around being used as a substitute currency, meaning if people think they are about to lose their shirts, they'll all start selling their gold into a market with increase supply and dropping demand.



12 posted on 10/30/2006 6:14:33 AM PST by CharlesWayneCT
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To: Proud_USA_Republican
Although the supply of gold looks set to drop by 159 metric tons for 2007, demand will plummet even faster, lower by 313 tons when compared to revised estimates for the whole of 2006, according to a new study scheduled for publishing Monday morning by Fortis Bank. The report was authored by a team of analysts led by veteran gold market watcher Jessica Cross, CEO at Virtual Metals, a London-based specialty consulting firm.

Jessica, the economic right hand keeps saying that Asian countries are getting richer and the middle class in such countries is growing. Historically, such nations have valued gold highly as a store of value and these traditional habits are unlikely to change. So what makes you think that the demand for gold will drop?
13 posted on 10/30/2006 6:16:22 AM PST by Old_Mil (http://www.constitutionparty.com/)
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To: Proud_USA_Republican

Up $10 today.

14 posted on 11/01/2006 9:23:46 AM PST by AdamSelene235 (Truth has become so rare and precious she is always attended to by a bodyguard of lies.)
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To: CharlesWayneCT
The gold people sometimes seem to miss that, like oil, when the price goes up, the profit from exploration and extraction increases, which increases the supply of gold.

If the cost of energy and materials rises along with cost of gold, the extraction costs also rise.

It is unlikely the gold supply can increase at the 8% per year rate that the dollar supply has increased for the last 11 years.

15 posted on 11/01/2006 9:27:07 AM PST by AdamSelene235 (Truth has become so rare and precious she is always attended to by a bodyguard of lies.)
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To: Freedom4US
You mean like the huge run-up during the first gulf war? Wait - never mind.

Money supply growth was flat during the first gulf war.


16 posted on 11/01/2006 9:29:58 AM PST by AdamSelene235 (Truth has become so rare and precious she is always attended to by a bodyguard of lies.)
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To: AdamSelene235

Nice chart, but we weren't talking about M3...


17 posted on 11/01/2006 9:48:04 AM PST by Freedom4US (u)
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To: Freedom4US
In six months you will be hard pressed to buy an American Eagle for less than $800. There may be a "price" for it on the paper exchanges but increasingly you will be unable to find the actual physical metal.

--May 1, 2006




18 posted on 11/01/2006 9:52:09 AM PST by Petronski (I just love that woman.)
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To: Freedom4US
Nice chart, but we weren't talking about M3...

So you don't think more than doubling the money supply in 10 years influences prices?

19 posted on 11/01/2006 12:01:41 PM PST by AdamSelene235 (Truth has become so rare and precious she is always attended to by a bodyguard of lies.)
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To: Freedom4US
"Really, for a currency of last-resort gold hasn't done much, considering the number of destabilizing world events of the last 20 years"

Gold prices have been crushed for the pass 20 years for two reasons;

1. The fed was watching gold and using it as an indicator for inflation; logic was, crush gold and crush inflation,

2. If you read deep you will find that during the period the Fed was crushing gold, other groups were taking the trend and making money off the policy. I seem to remember a scheme where a gold company would have a big bank sell the future and then they would dump gold. Needless to say, they were double humping the price down resulting in artificially low prices because they knew what the Fed was doing.

So, if your data is distorted in the first place don't assume you conclusions are correct - better yet, do poor data analysis and bet the farm, I make money every day from people who never learned to do data analysis; have a hunch, bet a bunch, I need more and some people apparently don't.

I'm not big on gold, just information, but I do know one thing for sure; if something big goes wrong and you are still alive, don't try to use the funny money we now call dollars to barter for anything. People in the East and Mid East are use to things going wrong, they don't live in Pollyanna land.
20 posted on 11/02/2006 2:36:42 PM PST by Herakles (Diversity is code word for anti-white racism)
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To: Herakles

I agree with you, but regardless of *why*, including manipulation, gold has been a poor investment during times of real crisis as of late, that's all.


21 posted on 11/02/2006 5:52:29 PM PST by Freedom4US (u)
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To: Freedom4US
one of my gold stocks is 400% higher that it was in 2000; almost 90% higher than what it was in May of 05.

$400% in 6 years is not too bad.

Oddly enough, gold's bottom was around 2000; shortly after that, the conservative republicans I elected into office started printing funny money out the wazzoo!
22 posted on 11/04/2006 1:46:12 AM PST by Herakles (Diversity is code word for anti-white racism)
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To: Proud_USA_Republican; Petronski
Apparent world gold supply down 17% as mine production plus hedging falls
23 posted on 11/09/2006 10:27:51 AM PST by AdamSelene235 (Truth has become so rare and precious she is always attended to by a bodyguard of lies.)
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To: Proud_USA_Republican

Gold was over priced @ $375.00 per ounce.

I would not be surprised to see it drop back to those levels over the nex year or so.


24 posted on 11/09/2006 10:29:33 AM PST by roaddog727 (BullS##t does not get bridges built)
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To: Proud_USA_Republican

Commodities have reached their pullback lows. It's up for everything now and for a while. Too bad gold has next to zero actual value except for gilding domes or it would participate more fully in the upcoming and just started commodity price increases. 634 is over-enthusiastic and the result of the glum-bear on the Art Bell Show last night.


25 posted on 11/09/2006 10:35:52 AM PST by RightWhale (RTRA DLQS GSCW)
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To: Fresh Wind
[ The only thing I don't understand is why is he so eager to sell me the gold he owns just before the price skyrockets? ]

LoL...

26 posted on 11/09/2006 11:04:18 AM PST by hosepipe (CAUTION: This propaganda is laced with hyperboles)
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