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The Once-a-Year Shameless Self-Promotion Article

By Jon Nadler       Printer Friendly Version
Oct 24 2008 5:05PM

www.kitco.com

Good Afternoon,

Gold prices bounced back from oversold levels near $680 and managed a return to near $730 by the end of the Friday session, thus reducing this week's loss to 'only' about $50. Deutsche Bank today opined that fair value in the yellow metal lies between $600 and $620. Suddenly, that number does not appear very distant at all. We drew howls of incredulity last year in New Orleans when we posited the possibility that gold might be trading anywhere from $650 to $850 at this time, this year. Why, we were even bestowed the "Moron of the Year Award." by people who lack basic clues about the markets. Should have asked for the cheque that came with it, darn it.

New York bullion trading headed into Friday's afternoon session with a $7 gain per ounce, with spot quoted at $727.00 The lonely bit of good news in these last few hours came from -where else?- India, where just a few days before Diwali, local buyers have been offered a bargain they've patiently waited a full year for. Think we better start reading some locally-produced gold analyses...Silver still lost 38 cents to drop to $9.28 at last check, after having dipped much lower overnight. Platinum fell $20 to $793, while palladium was off $2 at $165 per ounce. More commotion to follow next week. Hopefully, the endless liquidation will have run its course. Gold needs a break. So does this commentator.

Therefore, in the interest of putting some things into perspective and in order to give our readers a bit more insight into the angles we normally cover, we thought we might resort to the cheap way out this afternoon. Not cut and pastes from the MSM, but a real one-on-one interview with yours truly. The Gold Report does not mince words when it comes to tough questions. We tried not to mince any either, when giving them replies. Lengthy? Sure. But, hey you have all weekend to pore over it. Enjoy:

Jon Nadler: Where Might Gold Go?

Source: The Gold Report  10/24/2008

Jon Nadler, Kitco’s well-known senior investment products analyst, elicits both criticism and acclaim for opinions that some characterize as contrarian. In this installment of an exclusive interview with The Gold Report, he brings his three decades of experience to bear (no pun intended) on the outlook for gold, promoting the precious metal as a key asset in a balanced portfolio, as well as for its intrinsic value and “insurance? attributes.

"The Gold Report: Economic theory tells us gold should be taking off, given all the uncertainty in the marketplace. But we haven’t seen that happen. What is going on?

Jon Nadler: Well, as you may have heard, even Alan Greenspan found a glitch in his formerly "reliable" economic models during this crisis. Gold certainly will continue to have its volatile days, but the bigger trend is probably more important overall. To a certain extent, the metal got ahead of itself as a legacy of the huge infusion of speculative fund money that came into the commodities complex as a whole, and of course gold is part of that, aside from its role as money. This phenomenon goes back at least two years.

It accelerated last September when the Fed first started to cut rates, and then we got into a position between March and July where the ever-weakening U.S. dollar started things looking like a bubble of major proportion—not just in gold, but in most industrial metals and in oil. It got to the point where oil became so visible that regulators started making all sorts of unpleasant noises toward speculators.

So we saw the exodus from the commodities complex of a good part of that hot money from hedge funds. Of maybe $300 billion that had come in, we don’t quite know how much got up and left. We certainly know that some $50 billion left oil, which had close to $60 billion in it. That’s a significant proportion just sucked out of those markets. Of course, prices collapsed in the wake of that, along with the credit crisis unfolding on the front burner. That piece of the puzzle really didn’t become visible untila few weeks ago, whereas the exit of hedge funds from commodities was well underway back in late June.

TGR: Are we now out of that exit phase?

JN: I think it is continuing because some of the funds simply failed, like Ospraie just last month. Ospraie had a lot of bad bets in oil and gas contracts. We see others with stock positions being wiped out in this debacle. If you have profitable positions in gold or oil, you’re going to be forced to sell them to raise cash to meet your equity margin call. To some degree, that continues. It has wiped some $200 off the gold price in the last 30 days alone.

TGR: If hedge funds and speculators are still exiting, when do you see that flushing itself through and gold reacting more as one would expect, given the financial turmoil?

JN: We may not see that for some time. If deflationary pressures really take hold, we may have a case of “reverse hedge? developing, whereby gold might still fall to the mid-$600s or even as low as the low $500s, but still fall less in percentage terms than other assets might. In that case, investors would still be better off holding some gold and lots of cash rather than equities or real estate and such. Hopefully we don’t head into that deflationary spiral because that could hurt a lot of higher-priced producers of gold. Certainly a lot of the mining companies would have to reconsider what projects to mothball if that happens.

If we don’t go into that vortex and confidence returns by whatever means, things could stabilize. Stability in gold would imply a trading range between $650 and $850. It’s definitely a blow to the doomsday newsletter writers, who thought the circumstances we are seeing now were the ideal scenarios they’d dreamt of as far back as we can recall. They know, however, that the world of $2,000 gold is not one they would want to live in.

The fact that in July gold had trouble surpassing $930, (not even matching the March highs when Bear Stearns failed), was definitely a big wake-up call as to what was going on. And of course what’s going on is that a lot of people had already bought gold starting at $252 and all the way up to $400 and $600. When this big crisis hit, if they spotted their 401(k) accounts off by 38% and their gold holdings ahead by 50% or 60% or much more, it wasn’t a hard decision to make. They liquidated that which was profitable in order to mitigate their losses. That’s why they'd bought their gold to begin with.

So the latecomers, those who were rushing in, having put off their gold purchases until it became a burning issue, basically got caught trying to buy into this “runaway train? scenario. The few people who tried cost-averaging higher-level purchases of $900 to $1,000-plus were the freshest of buyers during these past couple of weeks. The difference we spotted in retail transaction patterns is that this particular cycle in the gold market brought out quite a few sellers, along with new buyers. So there’s very good two-way activity going on in the physical market.

TGR: The gold bullion coins appear to have a very high premium over the gold spot price, so there still seems to be some fear out there, or is it shortages?

JN: Some issues in the physical market are really grossly misinterpreted. Observers are not doing anyone any favors. My perception is that we have a contingent of pundits who are extremely panicked that this is a very poor reaction by gold to the crisis, and it will make them look bad. It already has. Now they’re trying to manufacture this global stampede into gold by panicking investors and by scaring them with stories of supplies running out. No one will argue that there are higher levels of individual investor interest, but it’s nothing “unprecedented.? They’re trying to make it out as unprecedented, and that’s simply not the case. Perhaps it says more about how short a time such pundits have spent in these markets.

TGR: Just how real is the shortage in coins, then?

JN: Specifically, what’s going on with the coins is that most of the mints of the world do not operate on a “produce-then-wait-and-see? basis. They don’t pre-mint hundreds of thousands of coins and put them on the shelf waiting for buyers to materialize. They basically operate on a mint-to-demand policy.

Because of the prolonged bear market in the '80s and '90s, most of them had slimmed down to bare essentials and, in fact, a lot farm out some components of the coin manufacturing process, such as blanking. The U.S. Mint is one of them. They ran into some blank coin quality problems in silver back in March, with about half a million silver blank rejects. That put them behind the production schedules, and when demand indeed kicked in for physical small coins, they were unable to fulfill commitments on a timely basis. This does not mean they ceased production. In fact, most of these mints consider small-item production quite profitable, which implies that they have added shifts, are finding new suppliers of blanks and new refiners for material, and augmenting production to meet the demand. Inventory build-up is one of their top current priorities.

Look back in recent history at the classical gold rushes, if you will. During the first one, in that inflationary period in the late '70s and early '80s, some 16 million Krugerrands were sold globally. The market events of 1987 brought on the next wave of buying, and that is when the U.S. Mint sold more than 1.25 million ounces of gold. Nor should we lose sight of the fact that in the ’91 recession, just a few short years later, they only sold a quarter million ounces. And then we go to about 1999 before Y2K. Again, they suspended sales of certain products like silver rounds, which were being hoarded by people expecting the end of the world. Next would be May of 2006, with the North Korean and Iranian political tensions. Again, very good robust sales, but nothing of the magnitude of ’80 or ’87, and similar to what we’ve had since last year. But at best, I think this year the U.S. Mint will sell about 750,000 or 800,000 ounces. It’s not the level of 1987’s stampede or panic, so I don’t see why they’re trying to make it out to be something bigger than it is.

TGR: Why is there such a premium, though? Just because they’re undersupplied?

JN: Yes, once the retail shops saw the Mint selling coins on an allocation basis, with some restrictions to build up inventories, the retailers started raising premiums on coins that they couldn’t basically get to fulfill previously sold orders. They raised their bids; they also raised their offer. It’s really limited to items like the silver rounds and some of the smaller fractional coins.

But in terms of Kitco getting supplies, basically we took the attitude that if we could not get a commitment from our distributors and suppliers as to a firm premium and/or a delivery date or both, we simply removed the items from the order pages in the online store. Those order pages are limited to items we are confident we can deliver at a decent price within a decent number of days. I know that the list is looking pretty slim, but we do have product to sell, and our pool accounts have never had any shortage of underlying material to secure; namely, 1,000-ounce bars of silver and 400-ounce bars of gold. We continue to offset 100% of all pool account purchases for the peace of mind of our clients.

And we’re adding back a lot of the items that had been removed. For instance, we just got several tens of thousands in gold coins and about a quarter million in silver coins from the Royal Canadian Mint. We’re getting Austrian gold and silver coins in very soon, and I’m sure that the U.S. will restart its sales to distributors once they switch dates on the coins to 2009. This is, coincidentally, the period when mints cease producing old (current year) dating and start with the new ones, and the switchover generally creates a bit of a glitch, too. At any rate, there will be product. We have eggs, thus we will have the omelet as well.

TGR: So it would be prudent to wait a bit.

JN: Absolutely. People are not good consumers if they go out and pay $5 over spot on $10.50 silver just to secure something that they think they’re going to have to barter at the grocery store. First of all, that likelihood is not there. Second, the liquidity of such items for such a situation would be questionable. When the supplies do come out, they will be priced at the previous norm. The Mint is not selling the New Olympic Silver Maple Leaf at more than the $1.50 they normally charge. That means they shouldn’t retail for more than $2.50 anyway. If people want to go on eBay and pay $5—well, as I said, try to be a good consumer.

Another thing some of our clients have done is that if they like a particular price that gold or silver reaches on a given day, they simply lock in that price and buy ounces of gold or silver in the Kitco or Royal Canadian Mint pool accounts, and then plan to take advantage of a conversion to physical coins or bars when their supplies and premiums return to earth. It could be just a matter of a few weeks overall.

TGR: Earlier you suggested that in a deflationary period or one just slightly inflationary, gold might be somewhere in the $500-$600 range. But over the longer term, you think it is more likely to stabilize somewhere between $650 and $850?

JN: I think that’s what we’re looking at in order to reflect current levels of supply and demand, basically make the mining community reasonably happy and keep India buying, which it’s currently not. Anything over $850 is just too much as far as they’re concerned, and they’ve demonstrated that stance for most of this year.

We’re in Indian Festival season and they’re lamenting about very poor sales. We just learned in mid-October, for instance, that the World Gold Council is apprehensive about sales levels of bullion in India, the largest consuming nation of the metal. Not only did they change their gold promotion campaign roughly in June or July, the campaign was switched to something very emotional, with raw appeal to long-standing cultural concepts. They really came down to the nitty-gritty to remind Indians that this is part of their cultural and spiritual life. The previous campaign had a happy, luxurious, light-hearted approach.

But more than that, they launched a program whereby people can actually buy gold coins through India’s post offices. It’s a huge distribution network, particularly well-suited to sales in very small increments, such as one-gram or five-gram coins. They recognize that urban buyers are not very gold-friendly anymore and that rural buyers continue to be the ones looking at gold as an alternate form of savings.

So your little one-gram coin for $30 or so provides direct access to a lot of people. It’s a brilliant marketing scheme in terms of convincing the refiners to make small material. I think in part that’s one of the things that delayed supplies from Valcambi, one of the refiners in Switzerland, which is probably trying to focus on ramping up to send a gazillion one-gram coins throughout India. Let’s see how it’s received; hopefully all these little grams will add up to something real in terms of overall tonnage. So far, the 800 or 900 or 1,000 tons that experts estimated for India to take from the market this year is definitely not there. It wasn’t there last year; it’s not there this year.

TGR: Any other significant factors at play in that scenario?

JN: Investment demand, robust as it may have been, has really been competing with a fairly healthy supply of scrap metal from secondary sources. In fact, last year it ended up almost a wash, where scrap suddenly had amounted to 1,000 tons in the market and investment was about 1,200 tons. So again, at high prices, gold finds its way into the market and we haven’t seen this sort of global man-in-the-street stampede to gold. It’s still competing with cash at this point, where people are really nervous about what they do with the money they take out of the bank.

TGR: Given that, if we’re looking at gold as insurance against the financial markets and cash, why wouldn’t gold go up? Why would it stabilize around $650 to $850?

JN: By and large it has already proven its insurance attributes by virtue of the fact that it outperformed the S&P just sitting around stable. It basically functions that way. If it stays in the $845 and $945 range, as it has this year—the overshoot was a blip—maintenance of these levels has already enabled those who hold some percentage of gold to mitigate the under-performance of the S&P and the Dow and everything else in their mutual funds. In that sense, it’s certainly done its job.

Gold doesn’t need to go to $1,200 or $2,200, as all of the doomsayers were saying, to prove itself. That would be more like proof that something has gone extraordinarily wrong in the global system and it’s a scenario you really don’t want to wish for. Should it come to that, you can pretty much be assured that other assets have totally vanished—not just a major damage hit, but you can write them off. That’s not desirable and the G7 and G12 seem prepared to do anything at their disposal to prevent a scenario where you would see both the Dow and gold at $4,000. That’s not what people are gearing up for, obviously, considering the social disruption and violence and all that it might engender. So stability is preferable.

Yes, I think some things are not going to go smoothly. There will be more pain, and more banks will still fail, and you will have occasional runs and blips where gold takes off out of the gate, but the bigger picture really says that this is about it. There’s no valid reason for it to really go up much, much, higher because a lot of the pressure now is on the deflationary side. With all the money that's been thrown into the system, there are many people expecting a Weimar Republic-style hyper-inflation to become the necessary result. However, as in many previous instances, a lot of this excess liquidity is expected to be mopped up out of the system on an orderly basis when things stabilize.

Among the unknowns, of course, are the effects of de facto partial bank nationalization by the U.S., and issues such as which types of participants will be able to play in the commodity markets, and to what extent. Reading between the lines of what Bernanke said in mid-October, it’s pretty clear that they don’t intend to have asset bubbles going forward because of the pain involved in deflating these bubbles. So I think values will not be allowed to get out of hand once again. I’m not talking about gold price suppression here. Far from it. I’m just saying that asset bubbles in general that make for these kind of outcomes probably will be regulated away, or at least in large part.

TGR: So do you see anything pleasant on the horizon?

JN: Not exactly. We can expect another two years of real turmoil in terms of difficulties in GDP and retail sales, and consumer spending. It’s going to be a difficult proposition for the industrial metals to make a good go of it—silver, platinum, palladium—because their primary users are: a) unable to get credit or b) scaling back production on lower expectations of demand or c) like the automakers, who are at best, willing to buy only a little bit for inventory because they still have unsold inventory to address first. We’ve seen copper take a big hit, just based on global demand destruction expectations. Same with oil, which is definitely reflecting the same demand versus supply situation.

TGR: Gold is something that can react on fear. Do you anticipate fear to drive it up?

JN: The way to avoid that is probably to not be focused so much on price performance, because most people ought to be buying gold as the allocation device that it really is, and then mobilize it only when absolutely needed, rather than buying because they think they’ll “make money.? That’s not in the cards, really. If you try to trade these markets, you get chopped up. We’ve seen that clearly. Anybody who has tried to trade these gold markets recently was just chewed up and spat out. It was impossible. When you have to stand in the way of these runaway trains that fund liquidations present, or one-off stampedes that some other funds might present on a given day when they set their mind to buying, that’s just not going to work for the smaller trader. The long-term 10% life-insurance type of allocation is the key here for many.

TGR: What’s your thinking about the U.S. dollar these days?

JN: The dollar still has surprises left in it, obviously, because everybody had called for its demise about a year ago. By March they had also buried it and sang its last rites. And sure enough, after July when push came to shove, a lot of people said, “You know what, okay, I’ll sit on dollars.? And there you had your shortage of dollars.

Not everything is fathomable today. We have elections in the U.S. in November, which could mean some interesting change in the national psyche as to which way we go forward, what programs get put into place, who’s the new Fed chairman or Treasury boss. A lot of questions are still unanswered. One of the fundamentals—one that readers shouldn’t ignore—is that whatever the government has put into motion in recent weeks may take upwards of 14 months to really show up. People expect instant gratification, and part of the wild swings is just frustration. “Where is the immediate result? How come we’re not roaring ahead?? These are not easy-going, fast-result types of processes.

TGR: You offer a logical, level-headed perspective that should be of some comfort to our readers in these highly emotional times.

JN: If I tried to convince you that it’s a one-way street and it can only go that way and buy now, beat the rush, two years from now you might not want to talk to me. I would have lost credibility. It’s not about being right on price forecasts, although I don’t think I’m too far off on those either. It’s not about making hype out of it; at the end of the day that’s really going to smell like you have an agenda. It’s more about seeing what’s going on in the underlying market and gauging the consumers’ pulse.

TGR: About a year ago, you told us that between 8% and 12% is an ample amount of gold to hold in the portfolio as insurance. Do you still advocate that sort of allocation?

JN: Given the circumstances we face now, I wouldn’t be uncomfortable raising that by 2 or 3 percentage points on both ends, so 10% to 15%. At the height of the crises in the ’79 to’81 period, some of the Swiss money managers that I recall following had recommended upwards of 25% in gold. There were valid reasons—double-digit interest rates and double-digit inflation and other scenarios unfolding that were truly pretty catastrophic. But I’ve not seen it higher than that.

I’ve seen it as low as 3% to 5% in the good times in the ’90s. Biotech, high tech, everything was roaring ahead; real estate was great and there was little need for the insurance. It was probably a little too optimistic to reduce it to those minimum levels. In general, right around 8% to 12% is still okay. I think 10% is a very good target.

TGR: Now that we’ve looked at how we may want to put some of this into our portfolios, can you give us your thoughts about physical gold compared to gold ETFs and funds such as the CEF and James Turk’s GoldMoney?

JN: When you get into the fund situation, CEF (which actually I like better than the ETF) would be intermediation. The ownership structure we like better than what we see in the GLD itself. Actually, James’ construct is a digital gold account, same as the Kitco pool accounts, but with a few additional features. And GoldMoney has done quite well, as their balances have grown impressively.

I remember when I first consulted with James, he had maybe $50 million or $60 million and they’re approaching $400 million or so now, reflecting the markets we’ve seen in the last several years. Kitco has its regular pool account, and another one that is a version built in collaboration with the Royal Canadian Mint. Essentially, all three are forms of physical gold ownership held in custody on behalf of the investor. Access to the accounts, generally, is an online interface as opposed to carrying around paper certificates such as the Perth Mint Certificate product, which is another excellent version of gold or silver in safe storage.

TGR: Tell us about your Royal Canadian Mint pool account.

JN: It’s basically like the “regular? pool account, only storage thereof is limited to the RCM’s Ottawa facility, so it’s a government-owned vault and the product in storage is limited to RCM-produced products such as the bars and coins they make. Nothing from the outside with questionable hallmarks can come in. The beauty of this product is that clients who own these ounces of gold or silver can log in directly into the Mint’s website (they are given individual usernames and passwords known only to them and the Mint) to audit their own holdings day or night.Any movement of metal that they may have sold, orders for such movement, must come from the client directly and only to the depository. It’s an extra measure of safety and, for the money; it’s very worthwhile. It costs the investor a flat $60 a year to have that account maintained and insured and segregated in that respect.

TGR: What reservations do you have about ETFs?

JN: Basically the trustee holds the gold, so you already have a party you need to trust; ergo, the named trustee. You have attrition of balances due to management fees, which could move higher any time. It’s a question of cost. Right now it’s only 40 or 50 basis points, but likely it will eventually rise closer to 1% or so. And then there are questions. Do you want to be trading like a stock subject to general stock market volatility or holidays or rules or reporting requirements? Or do you want to be trading more in the sense of an open gold market with ownership of fractional ounces?

The big difference between the ETF and the others is your ability to convert into usable, fabricated product. That’s simply something you cannot do with the ETF. All of these other vehicles let you convert into coins, bars, and so on for a small premium. That is something you saved up front, but you can definitely take possession of your holdings. For instance, Kitco pool and GoldMoney permit the holder to receive balances in fabricated form; you simply convert your part and parcel of that large bar ownership into Maple Leafs or whatever you like.

TGR: What’s the premium for conversion?

JN: Simply the manufacturing premium of the coin and nothing more. In effect, suppose gold is at $800 and you’re buying your pool ounce at $803. That day you would have to pay something like $860 for a coin, so already you saved a tremendous amount because no one had to fabricate. The bar already exists and you own a portion of it. Two years later, even if the price stays the same, you just say you’d like 10 Maple Leafs for your 10 ounces of pool. The fabrication cost for Maple Leaf is 4% or whatever—so $32 a piece at that rate. Pay that, and shipping, and you have your coins.

TGR: If we’re looking at gold as insurance and keeping it as a percentage of our portfolio, what would be the value of converting it into coins? Long term, are they as valuable as CEF and ETF or a Kitco pool account?

JN: Yes, as long as you’re not doing apples-and-oranges and think of your gold allocation in terms of junior or not-so-junior mining shares, because then you’re really getting away from the concept. If it’s about gold per se as the vehicle, exposure is about the same whether you bought the ETF or the CEF or any of the products in Kitco pool and so on. The difference is your net cost up front, or ongoing carry cost with management fees, or your ability to convert in a pinch if you need any part of it in physical. As far as the wisdom of it, it would track very closely to the price of gold. For long-term holders, that’s an ideal situation.

Most clients who do this type of allocation look for three things. First and foremost, they want value for money. They’re not going to pay $3 or $4 over spot for silver when they can buy silver pool for maybe a dime over spot. They get a lot more metal for the money. Second, they really don’t want to hassle the custodial arrangements with uninsured bank safe deposit boxes. The third thing is liquidity. What good is your gold or silver holding if you cannot sell it in an instant?

TGR: We’ve spoken mostly about gold, a little bit about the U.S. dollar. How about the poor man’s gold? Silver has more industrial uses than gold does and we’re seeing a big gap in the gold-to-silver ratio. And silver coins are almost impossible to get now, compared to gold. How should investors be looking at silver?

JN: We’re not typically very big ratio followers. We don’t put a lot of weight on gold-oil, gold-Dow or gold-silver ratios and so on. These ratios have gone away from the historical norm of 16:1 or 20:1 and they’re probably not returning to anywhere near that. We gravitated for a while in the 40-to-60 area and got pushed close to the upper end of the 80s recently. It’s narrowed a bit, but I don’t see that it must return to a particular ratio and I don’t expect to see the 20s again. Even if we return to 50:1 or 60:1, that would be pretty okay, and 40:1 or 30:1 would be, wow! Like why not?

But in terms of buying, if the core position in gold is already in place and secured, I don’t see why one wouldn’t add a small component of a more speculative position in silver (because) to me, silver is a trade. It’s pretty much lost its long-standing monetary attributes. Having said all of this, if one is looking for a "play,? yes, I suppose silver has decent potential once the industrial side of the equation becomes alive and well again. And even if it does not, a 10% move on $9.50 silver might be a heck of a lot easier to take advantage of (in terms of time) than a corresponding $70 rise in gold. It’s all about odds.

TGR: But you’d put it in the same context as core metals, copper and such?

JN: Actually, I think it’s better because to some extent it retains a little bit of that monetary connotation, and some people do buy it as a hedge and protection. The expectation (I really should say "hope") we would have at this point is for the price to be somehow getting back to about $14.50 before we get into the second quarter of next year. We are at $9.50 today, so $14.50 is not at all impossible. It’s lagged because it relies on industrial demand unlike gold, where it’s strictly the monetary attributes being considered. And now we have the unfortunate overtones of the jewelry component coming into gold and saying, “Who’s going to buy that for Christmas??

So the fact that silver lags could actually add more luster to it as we go forward. The SLV,if you look at the Exchange Traded Fund, basically holds about 220 million ounces and that’s a fairly steady sign, just like the gold ETF is steady. What I don’t know about iShares silver is what component consists of institutional and hedge fund speculative traders. We know with gold it’s better than half—it’s this fickle money as opposed to the man-in-the-street. I suspect silver could be the inverse. Maybe typical individual buyers are a larger component; that could be good news, because it would tend to lend stability to the fund in terms of long-term holdings and less volatility and fluctuation.

So I think it’s a very nice buy at anywhere between $8 and $10. If I were doing it, my objective would be to get out between $14 and $17. Could it go to $20 or $22? Sure. It already has early this year. $24 would be the top end as far as I can see at this time. At a certain price break, it becomes a headache for industrial consumers, as we saw with platinum at $2,300 and palladium at $600 and rhodium at $10,000. Right now they’re a fraction of what they were. I would expect car makers to come out of the woodwork and say, “Even for the long term, this is a great little place to accumulate some for inventory because we haven’t seen these prices in years on the noble metals either.? So, yes, they’re good adjuncts, but for different reasons. When it all comes down to it, gold dominates that safety and insurance policy, whereas silver has to factor in what happens in the global economy as well, which is right now the dominant theme, of course."

http://www.theaureport.com/

Pleasant Weekend to Everyone.

Jon Nadler

Senior Analyst
Kitco Bullion Dealers Montreal

 

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