All that glitters – GOLD

19 Aug

With the recent run up in oil, it is very interesting to look at oil versus GOLD, the ultimate hedge against inflation, deflation and just about anything that ails you. Listen to what some of our friends say about GOLD right now…

John Bott, Chairman of Tri-Star Financial and head of the Parallax Capital hedge fund, the #2 fixed income fund right now said,

“The low statistic in Barrels of Oil to Ounces of gold is 8 barrels of oil to 1 ounce of gold. The average is 15 to 1. With oil at $113 per barrel oil at 8X would be $904 at 15 gold would be $1695 the high was 25 to 1 which would be $2825 per ounce. Inflation adjusted from the 1980 highs gold would be $2300/oz. The Dow Jones index currently at 11500 has been at parity with gold twice. Once in 1930 and again in 1980.”

Todd Hennis, CEO of Colorado Goldfields, Inc. (traded under the symbol “CGFI”) had this to say,

“Gold and oil act as ‘the anti-dollar’.  When the US currency is strong, gold and oil prices are generally at lower levels.  When the dollar is weak, gold and oil priced in dollars are generally at high prices.  Compounding this fact for the first time in history, gold production output has been falling for the last six years after gold output reached its peak (“peak gold”) and oil is rapidly approaching its production output peak (“peak oil”).

While we have seen large intervention and other action in the dollar and euro over the past two weeks, the fundamentals of gold and the US dollar will reassert themselves shortly.  There is no economic reason for the dollar to strengthen, and currency interventions always fail over time. When this happens, we will see gold move aggresively over $1000 an ounce.”

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Posted by on August 19, 2008 in BLOG


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