So says UBS. Granted, they admit that $930 could be sustainable, but they point to the following factors:
- Jewelry demand is falling off. Well, in places, and for a time, maybe. But go ask the people in Vietnam about where to store your wealth. And India will just have to get used to the prices.
- Central Banks could be big sellers. Central Banks, UBS thinks, consider gold expensive and are likely to be big sellers. I have 2 questions, though: 1) How much gold do Central Banks really have left, and 2) Yes, Central Banks really know the price of gold – like when Gordon Brown sold half of the people of Englands gold RIGHT AT THE BOTTOM! Geniuses they are.
- Scrap metal is coming to market. Naturally, that will hold down the price, just like it has for copper, right? Conveniently, UBS provided no data.
- Producer dehedging is over. Ok, I’ll give them that one, but so what? What if just 1% of the investment money in the United States alone tried to move into gold?
- No need for inflation hedge, the Central Banks will protect us there. That comment makes it hard not to swear here. I’ll remember how Helicopter Ben has got my back as I try to find the money to fill up my fuel tanks for the winter heating season; not to mention my cars.
Oh, did I mention that UBS is one of the LBMA ‘market making bullion banks’ that make up the 8 or less traders category? You know, the ones manipulating the price of gold? Maybe their shorts are under water…
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Check out the new Casey Report (which previously was part of the International Speculator) for a more unbiased view of big picture economics and investing.
