Ideal gold price £1500?

[silenceissilver]

Just watched a video of the owner of a big German PM shop (Kettner Edelmetalle), talking about this. As most people here wouldn't understand it, I rather don't link to it but tell you about it:

The ideal gold price, based on its purchasing power and without the huge influence of the derivate market, would be between 1700 and 1800 Euros (currently 1750 Euros are almost £1500), although he thinks there is no question it will go over 2000 Euros but only when, given the current economic situation but the first statement would imply, eventually it would come down again to what is currently the purchasing power of 1750 Euros.

He didn't really tell in detail how he came up with this figure but to me it seems reasonable, once we pass the £1500 we will be in the bubble area. It's none of these extreme figures that are flying around (and that he too thinks are likely to happen in an economic crisis but only for the duration of the crisis)

What do you think?

[mr-dead]

I would love gold to be around that price and it will happen at some point but no one knows when.

Always take these stories with a pinch of salt as he may be biased " the owner of a big German PM shop "

 

[silenceissilver]

2 minutes ago, mr-dead said:

Always take these stories with a pinch of salt as he may be biased " the owner of a big German PM shop "

That's very true but it's still remarkable because at the same time he says he thinks it will go beyond 2000 Euros during a crisis he also thinks is going to happen. Based on this video he would have to recommend potential customers not to buy when gold is at 1900 Euros. Obviously he won't do that but it's still a remarkable deviation from the usual "buy, it's undervalued and it still will be at $5000 because the price should be at 20.000 at the very least anyway, so always buy".

[HawkHybrid]

1.gold is a long term store of value.

2.gold goes to the moon in a short time frame.

 

is there a conflict of terms in the above two statements?

 

HH

[silenceissilver]

6 minutes ago, HawkHybrid said:

is there a conflict of terms in the above two statements?

No, not at all, that's why I find these statements interesting, usually you only see gold dealers talking about short term moon figures, often high even for moon figures, as if they were the long term gold price. That's what makes me believe this could be a good guess of someone from the gold business who knows what he is talking about. Because the long term non-moon figure is what interests me and I would like to know where it is and what other people think where it is.

[HawkHybrid]

what is the average gold price for the last 12 years?

(including the 2011 highs)

if gold historically on average beats annual inflation

by a small amount, then what 'should' the gold price

range be going forward?

(can we say that gold was short term overvalued

during the peak in 2011?)

 

a lot of the miracle numbers should actually be true

(I'm assuming the integrity of the data) but they are

multi decade figures. fundamental analysis that covers

decades of activity takes decades to play out.

with hindsight you could have told a victorian that their

sovereign would through fundamental analysis be worth

£300. just don't forget to tell them that it'll take over 90

years for it to happen.

 

HH

[sixgun]

1 hour ago, HawkHybrid said:

1.gold is a long term store of value.

2.gold goes to the moon in a short time frame.

is there a conflict of terms in the above two statements?

HH

No conflict.
Gold has been a store of value BUT it has not be as good a store as it should have been considering the massive currency creation.
When the chickens come home to roost the massive currency creation with cause the price of gold to shoot to the Moon as currency is hugely devalued.

The real question is not how much will gold be in terms of Federal Reserve notes - it is how little will Federal Reserve notes be worth?

If it takes $100 000 to buy a loaf you end up with gold being priced at $millions. When fiat collapses the price of gold will be infinite, not that an infinite amount of fiat will do you much good other than to light a fire. 

[HawkHybrid]

5 minutes ago, sixgun said:

No conflict.
Gold has been a store of value BUT it has not be as good a store as it should have been considering the massive currency creation.
When the chicken come home to roost the massive currency creation with cause the price of gold to shoot to the Moon as currency is hugely devalued.

The real question is not how much will gold be in terms of Federal Reserve notes - it is how little with Federal Reserve notes be worth?

If it takes $100 000 to buy a loaf you end up with gold being priced at $millions. When fiat collapses the price of gold will be infinite, not that an infinite amount of fiat will do you much good other than to light a fire. 

 

so 1oz of gold changed into huge amounts of

currency will buy you the same suit?

(so much for gold going to the moon)

 

HH

[sixgun]

Just now, HawkHybrid said:

so 1oz of gold changed into huge amounts of currency will buy you the same suit?

(so much for gold going to the moon)

HH

Something like that. i don't believe gold has kept up with inflation - i expect there will be some catch up - but much the $million price ticket would be inflation.

[HawkHybrid]

3 minutes ago, sixgun said:

Something like that. i don't believe gold has kept up with inflation - i expect there will be some catch up - but much the $million price ticket would be inflation.

 

if gold can still buy the same suit then how hasn't it

kept up with inflation?

 

HH

[sixgun]

12 minutes ago, HawkHybrid said:

 

if gold can still buy the same suit then how hasn't it

kept up with inflation?

HH

Well i think the fine Roman toga and sandals is an old wives tale. You have to compare like with like - the fine suit and shoes from 1900 or whenever it was supposed to be an ounce of gold. 
A pair of handmade shoes from Northampton will set up back £450. You wouldn't get change from an ounce. 
So i don't believe you can buy the same suit with that ounce.

We will never agree on this matter - only time will decide who is right.

[HawkHybrid]

13 minutes ago, sixgun said:

We will never agree on this matter - only time will decide who is right.

 

it's not a matter of agreeing or disagreeing.

you either:

1. can buy an equivalent value item(suit, or whatever it is)

2. you can't

 

gold either:

1. holds it's value

2. changes in value(either up or down)

 

ie the original statements fundamentally conflict with each

other. (which is the point I was trying to make. gold can go

up and down but over the long term it has historically on

average held it's purchasing power. this means that due

to the nature of the way gold is traded the change in the

value(overvalued/undervalued) is usually not huge.)

 

HH

[sixgun]

You cannot buy the equivalent suit  and shoes for 1 oz but you can buy a suit b/c they are mass produced at much cheaper costs.
Did it hold its value? No it hasn't held its full value, some but not full value. During the 21st century it has been catching up.

[Xander]

The owner of a big PM shop says Blah Blah Blah...better start buying Gold from him before its too late.

[HawkHybrid]

let's say gold is undervalued by 20%(hyperthetical)

so it has retained 80% of it's value. assuming

symmetrical overvaluation by 20% to even it out to

100% long term average. then buying at 80% of it's

value should yield a 50%(80% to 120%) return if

you sold at the next peak or a 25%(80% to 100%)

gain if you sold it at the long term average.

 

how undervalued is gold versus it's long term

average?(in purchasing power, not in currency)

 

HH

[mr-dead]

Looking at gold price over the last 25 years,

Between 1995 and 2005 gold price was around £245.

Using the bank of England inflation calculator this equates to £462 (2018) so we are 261% above the inflation adjusted price currently.

[Pipers]

1 hour ago, mr-dead said:

Looking at gold price over the last 25 years,

Between 1995 and 2005 gold price was around £245.

Using the bank of England inflation calculator this equates to £462 (2018) so we are 261% above the inflation adjusted price currently.

Are you suggesting the Inflatiion calculator is incorrect or are you suggesting the Gold price should be @£750 Toz.  Or maybe somewhere in the middle eg £1000Toz? 

 

[Abyss]

The age old question what should the Gold price be? The https://www.usdebtclock.org/ Gold priced in USD $9257. We have QE1/2/3 and now QE4 Repo market created trillions dollars in relation to Gold it could be significantly undervalued. IMHO Gold price is the sum of the trades placed by market participants in the future and options markets. The price discovery mechanism for Gold may change in the future.

[platinreloaded]

the gold hype will begin above 1.900 $ . Silver hype will follow at this price. If Trump goes crazy we will see it in the beginning of sommer 2020.

If he leaves Irak with his 5.000 heroes we will see 2.000 $ and much more a litte later.  

[vand]

21 minutes ago, platinreloaded said:

the gold hype will begin above 1.900 $ . Silver hype will follow at this price. If Trump goes crazy we will see it in the beginning of sommer 2020.

If he leaves Irak with his 5.000 heroes we will see 2.000 $ and much more a litte later.  

This is correct. We are still in the early adoption stage, and the stage 2 won't really begin until we take out the old USD high, at which point PMs become a more accepted, if reluctant part of mainstream portfolios. Stage 2 will see at least a doubling of price before we enter the increasingly dangerous stage 3 top.

[vand]

There is little point arguing what the price "should" be. The price is the price. 

The important thing is to understand what are the main long term drivers of gold, but to also recognise that these drivers will push it both multiples above and below its cyclical trend, same as with all capital markets.  

[xthomasx]

Down the line, gold is always gold.

It doesn't care about printed pieces of paper. Nor the latter's amount, nor the relations between various pieces of paper.

The mere idea of an 'ideal price' of gold (in relation to fiat money) is folly.

[silenceissilver]

10 hours ago, xthomasx said:

The mere idea of an 'ideal price' of gold (in relation to fiat money) is folly.

The wording is bad. He said "ideal" but in the context he meant the gold price based on physical supply and demand without the much bigger paper market on top of it - on this physical basis, he thinks the price would currently most likely be about 1750 Euros, increase its purchasing power considerably during the upcoming crisis and afterwards go back to the purchasing power that 1750 Euros currently have, in whatever denomination.