Editorials

Case for gold III September 12, 2007 - No reporter cited

In December, 2003, in this space, we made the case for much higher gold prices. At the time gold was about $390 an ounce.
Today (Monday) it stands at just over $700 an ounce.

Four years ago, we predicted gold would go higher because of the war in Iraq, deteroriating value of the dollar versus other world currencies, soaring budget deficits, opening of the gold window in China, rising inflation due to higher oil prices, and tensions between the United States and North Korea, which was threatening to explode a nuclear bomb.

We repeated our prediction for much higher gold prices two years later.

Where does gold from here?

The better question is has anything changed for the better in these worldwide trends? Save an improvement in North Korean and U.S. relations, no. In fact, a case can be made for a worsening condition and much higher gold prices.

Now along with the wars in Afghanistan and Iraq, you have the government bailout of the sub prime lenders.

If we had a stoplight predicting inflation it would be solid green now as in “go.” Not yellow for neutral, not red for stop.

It was no coincidence that President Bush and the head of the Federal Reserve at the same time promised to do whatever it takes to restore liquidity to the markets. Translation: we will print the dollars, you spend them.

Another factor propelling gold prices at the moment is the Christmas jewelry buying season.

At the end of the day, $1,000 an ounce gold within the next two years is possible.

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