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Author: franchot Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 465111  
Subject: Re: Quo Vadis, Gold? Date: 4/15/2013 4:51 PM
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Circumstances are everything

It's curious, isn't it? Gold spent the 1990s not doing anything terribly exciting, bouncing along around $300. By 2011, it was $1,900. As for oil, turns out talk of its demise circa 1990s was greatly exagerrated. Which is one of the reasons that graduate oil field expertise is currently in short supply and in high demand. Oil sunk to $10/bbl during the 1990s and reached a historical high of $147/bbl in 2008. What caused commodity prices to stage an astonishing surge during this period? When the dotcom bubble burst, politicos rushed to recreate the feel good hysteria by inflating a global housing bubble via idiotically loose credit controls and slack monetary policy. After 2001, the trash the currency, crank up the printing presses, big up the housing market paradigm dominated. The fall out from this is painfully evident in PIIGS, where the bubble has been grotesquely mangified by the single currency. In the meantime, interest rates remain at a ludicrously low level. The message to savers is don't. With all the money sloshing around from the QE festivities which litter the horizon, it is unlikely that normal service will resume anytime soon, even if the gold is in for a bumpy ride:

Ole Hansen, Saxo Bank’s head of commodity strategy, said the market was now in “liquidation mode” as people seek to reduce their exposure to the metal, predicting the price could hit $1,300 before finding any kind of support. “It's first and foremost this major technical breach we had last week,” he said. “That really killed it off. “Sentiment is really frail and, interestingly enough, this is happening over a few weeks when we are seeing economic data that could in other circumstances be supportive to gold.”

http://www.gold.org/investment/statistics/gold_price_chart/

http://www.bp.com/extendedsectiongenericarticle.do?categoryI...

http://www.telegraph.co.uk/finance/personalfinance/investing...
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