 Quick notes on the current gold price
Kenneth J. Gerbino
Archives
Kenneth J.
Gerbino & Company
Investment
Management
November 11, 2004
The $430-$435 price level that
everyone is talking about as a major resistance level for gold
is based on prior highs in 1990, 1993, and 1996.
There is a big problem with
this concept. Those days are gone.
Since then money supply, trade deficits, debt levels and world
government budget deficits have mushroomed. Inflation at just
2% per year since 1993 (to use as a mid-point) would equal an
increase in the gold price to $535.
Therefore there are no real-world
comparisons to support the paranoia about the $430 level.
What is real is that gold has
had a big run up in the last 6 months and yes it may need a rest.
Also with the dollar being very weak and most likely oversold
the last few weeks, gold may rest or back off here. But these
are small waves hitting the beach. The tide is more important,
and the economic tide says gold goes a lot higher. Buy on sell-offs.
Again using 1993 as a mid-point,
since then:
- M2 Money Supply is up 85%
- Trade Deficits were running
$100 billion a year, now they are $600 billion
- Debt as Percent of GDP was
240%, now over 300%
- China and India as economic
powers have almost doubled their GDP
- Government Debt globally has
increased by Trillions
There are plenty more statistics,
but I am off to catch a plane to address the RMG Mining Trade
Group Conference in Stockholm with the London Royal School of
Mines and Barclays Bank. I will be sure to let them know this
conclusion... lots of people may be selling at these levels but
the fundamentals, which are reality, are opposite to any interpretation
of the long-term graph. The long-term graph is measuring a totally
different world we left behind 10 years ago.
Please visit our website
for more articles on gold, mining shares and the economy .
10 November 2004
Kenneth J. Gerbino
Archives
Kenneth
J. Gerbino & Company
Investment
Management
9595 Wilshire Boulevard, Suite 303
Beverly Hills, California 90212
Telephone (310) 550-6304
Fax (310) 550-0814
E-Mail: kjgco@att.net
Website: www.kengerbino.com
321gold Inc
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