Do we see gold hit $1000 and silver $12?

This is a pretty straight forward question, does gold hit that magic number of $1000? I heard on one of the shows yesterday following mad money that to produce gold from the mines it cost about $1000. So if this happens, you will see massive shut downs in the mining side of things.
Listen I am no expert on this, so I want people who understand this situation better to reply here and explain how this could happen and why this is happening. I know Bernanke set a lot of things in motion with his comments a couple of weeks ago, but this is insane how fast people are moving off of gold and silver. Also I keep seeing people mention gold at $800 possibly, is that even possible?​

 

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Anything is possible. Mining cost does not affect gold value much because a small portion comes from mining. Much of the gold in circulation is recycled.

 

Does gold hit $1000? No.

Will gold hit $1000? Yes, I believe so.

 

LOL does and will are basially the same thing in the way I asked the question, but atleast I got somewhat of a answer, thx. :smile

 

@SCFY Metals at almost any price away from a current days market prices are regularly anticipated and usually boasted to be right around the corner, due to drop or spike upwards at any moment. Those same hype spinning media goons on TV talking about prices now, also rode the price wave in the other direction over the last few years, which pretty much tells you what they are all about, and it's not anyone's best interests. They just like the attention as it all amounts to ad revenue and an easy job.

At various times gold has certainly been at any number of not-to-be-believed prices, whether they were priced upwards or down. So, is it even possible at $800? Most certainly. It was there and below that price just a few years back. Look it up in the metals' history charts available on sites like Kitco. Is it really possible... the US Mint was selling its first year of issue Proof 1 oz. (.9999) 2006 Gold Buffalo coins to collectors, a coin like any other "numismatic" coin with a significant mark up over spot, for $800. Around that time, bullion spot prices were less than $800. Those same 'collector' coins, sold for double that less than ten years on when spot prices rose. We also saw loads of bullion selling like that too. There's got to be a lot of sore stackers out there these days. The folks buying because $5000 spot was forthcoming. That could still happen, but it shows that no one knows when, if ever in their life time it will occur for anyone to do anything about it. And note that if the price drops further, some who bought at very high levels will make rash decisions to sell at drastically undermined prices, making the possibility for lower prices a real prospect, of sorts.

Also, don't undervalue your own thoughts on these matters and simply accept what any other stranger on a public comment forum tells you. It doesn't mean anyone else knows more about these things, especially... especially, what the price is going to do. For that you have to trust yourself and the knowledge you gather from observing and reading as much as you can on the topic. Only you can make a personal, rational decision, particularly when it comes to your personal financial commitment. Regards.

 

One of the best and well rounded answers I have seen on here. Much respect is given to people who give responses like yours. Thanks again.

 

I know, it was somewhat of a joking response because that is a peeve of mine. I think ESPN started the trend of speaking of past, present, and future events all using the present tense.

For example (a week after the game): "If Denard Robinson doesn't get hurt, does Michigan beat Ohio State?"

That could be stated more eloquently: "If Denard Robinson had not been hurt, would Michigan have won the game against Ohio State?"


I will give you my honest answer to your question though. Our monetary policy should have caused gold and silver prices to increase, but it should have been a slow, steady rise over the years. So find a 20 or 30 year gold price chart on the Internet and print it out. Then take a ruler and draw a line from the starting point that would show steady price increases to account for the expected price growth to account for inflation.

The end point of that line is where the price of gold should be and where it will get back to eventually. When I do that I get an end point that should be in the $600 - $800 range. So that is where I think it will go eventually.

At that point I think it will be safe to buy bullion. In the meantime I will only buy gold or silver coins with numismatic value.

 

I understand what you are saying, I am going to continue to buy silver, but gold is on hold till its settles down.

 

Krispy gave a nice answer, especially about the dangers of listening to anyone as if they know what will happen, especially short term. If you ever read somewhere about how someone "knows" what a market will do short term, make sure you print that page. You keep that page because it is proof how that person is a complete and utter idiot.

Its impossible for anyone to ever "know". There are maybe 10 billion variables that affect pm pricing. Some might be more important than others, but all can affect pricing, especially short term. About the only thing "knowable" about pm pricing is long term, because of monetary policy inducing and encouraging mild inflation, pm "should" long term go up around the level of inflation. This is over DECADES it "should" go up, but even this is not 100%.

So, what to do if no one can "know"? Educate yourself. Understand the assumptions of bulls and bears, and make up your own mind. Never blindly accept any "common knowledge" or snappy little catchphrases people can come up with. 20-30 years ago there were tons of derisive, bearish phrases against pm, today there are a lot of snappy cute little bullish phrases.

Never "believe" anyone. Make up your own mind. If you believe different than me, or Krispy, or Inflexion, or anyone, that is cool. If you are debating here on the forum, though, you will be asked WHY you believe that way though. I for one believe this is extremely healthy. One should be able to articulate WHY they believe something, no?

 

That could very well be the average cost to mine gold today, but it's by no means true across the board. We have a large gold mine nearby that discloses its cost online. On their main page, it shows their average cost per ounce in 2012 was $708:

http://www.barrick.com/operations/north-america/golden-sunlight/default.aspx

There are mines that can extract gold for less than $708, and there are mines that can't do it for less than $1000. If gold falls below $1000, those mines might suspend operations, and that would cause a reduction in supply. The more the price falls, the more mines cease operations, further reducing supply. If it falls way back down to $300 an ounce, much of the recycling efforts that have sprung up since 2008 will likely suspend operations as well.

On the mining side of supply, keep in mind that gold mining is different than silver mining. Most silver comes from mines where silver is not the main product. So to calculate the cost of mining silver, they figure out the incremental cost of extracting the silver from the ore they've already brought to the mill. This is not true for most gold mines.

 

Yeah, I just touched on this post in the "how low can you go thread". While there can be no argument that nobody "knows" for sure, I think it is important to understand it is not a coinflip either. I think you run the risk of making bad decisions if you feel that it could go up, or it could could down, who really knows?

The way I have always saw it is, there are inefficiencies in the market. To be a successful (good) investor, the challenge is to find these these inefficiencies and they make sure you find you youself playing the correct side of the inefficiency. You do this, and you will win more times than your will lose.

The ironic thing about this is, there would be no inefficiences if everyone was a good investor. To take it further, if EVERYONE was a good investor, well, there would be NO good investors, just a bunch of average investors, since the inefficiences would no longer exist, and you could not play the odds since everything was valued fairly. So just like a top needs a bottom, a good investor needs a bad investor. Sorry to get all ZEN on ya.

Mike

 

I bought gold bullion in the 80's at $372 to be part of my asset portfolio. I also collect gold coins. I have seen gold fall to $250 and go up to $2000. I try not to think too much about the price of gold. Gold is gold and that is what you have. It is like owning a nice house. The cash value is only relevant when you sell. If you are going to hold your gold or live in your home, just enjoy it. If you are buying for investment, that is a different matter (but, if you are investing in precious metals, in my opinion, you might as well go to Vegas and have a nice time while you gamble).

 

I don't recall gold ever reaching $2000, and I'm fairly certain that the last time gold really touched $250 was in Dec 1978, so it can't have reached that point since the "80's," unless you meant the 1880s (or earlier), in which case, you got scammed... and you're 150+ years old.

As for the costs of extraction, the $1000 price point has nothing to do with that. It's a psychological support. The human psyche tends to look at numbers that end in 0s as important. The reality is that the gold buyers will stick around until people stop selling to them. I know nothing about how to calculate a value for that, but I'll guess it's somewhere between $1185 ($22/g 14k, which will result in offers of $20/g) to $1067 ($20/g 14k), given much of the retail "solid gold" jewelry in the US is made from 14k.

Now, it's probable that they are in 1-yr (or longer) lease arrangements, so maybe the number would need to be sustained below that level for half a year. If that happens, the number when the stores actually shut down operations might be as low as $880 or as high as $1067.

Beyond all of that, gold prices will invariably continue to drop as long as the Chinese government continues to set interest rates in the 20% range. Why would anyone own gold when the government is setting rates that high? Essentially, the "drop" in gold currently being seen is the drop that was called for in October as the stock market began to grow. We didn't see the drop because Chinese and Indian mindsets led them to conclude that they should keep buying gold in the retail sector. Now that the Chinese are given huge incentives to NOT buy gold (higher rates of borrowing and higher rates on savings), the demand will shrink.

That said, I can't see the price drop below $1000 without seeing actual deflationary pressure on technology product pricing.

Platinum and Iridium (PGMs) are still the metals to "invest" in, if you plan to speculate, as both are necessary for the vast majority of industries in the modern world.

 

I can't do a thing w/o Elaine...:so-sad:

 

I thought Stewart had an interesting take on gold's record breaking drops:
http://youtu.be/BE5YxEcZqlg

 

Yeah! She was a particularly good example of a voice on this forum to be wary of with flooding threads of daily postings on solely upward movement of metals prices and never a peep on any downward moves. Any mintage number was a statistic to exploit for reasoning to buy heavily into some collectible product or other. One day about 2-3 years ago, she stops posting and with metals declines, this supposedly all-in PM investor (mind you of namely numismatic coins paying the US Mint's full retail price) she hasn't been seen since, kind of like the stack she claims to have, unseen.

 

Wondered where she went. Maybe she was really all-in with gold and now she's living in a refrigerator box down by the river with no computer to post with. It would be sad if it weren't funny.

 

I think she sold all her PMs at the peak, moved to the Philippines, and lives in a secluded house on the beach!



...or mobile home...

 

2 really good videos on CNBC from 6/28/13. The 1st, the bald "Pawn Stars" guy on gold & silver, talking about how he's having trouble getting physical PM right now:

http://video.cnbc.com/gallery/?play=1&video=3000179015

The 2nd, Dennis Gartman, "Gold has probably seen it's worst"; Altho he didn't say he was buying gold here. He sounded quite bullish still on stocks.

http://video.cnbc.com/gallery/?play=1&video=3000178742

P.S. I just saw common date circ. Merc. dime rolls are still selling for about $100. The melt value on Friday was about $71. What are people (buyers) thinking???

 

What is being said is that they can't get physical bullion at the price they will pay for it rather than they can't get it at all. That type of quote is used by bulls all of the time when the price drops and the premium increases. Many suppliers could hedge with puts on SLV, but they, like us, have absolutely no idea of which way it will go. Not even the middleman companies want to lose more money for the next quarter. There are still many world political and social events ( which we can't discuss on this site) that could alter the direction IF people felt PM was a risk asset rather than USD which is where they have been turning .