On September 8th I wrote ($1000 gold: Is the third time a charm?) that if gold could clear $1,000 an ounce without attracting enough selling to bring it back below that level (as happened twice before) then $1,000 could become the new floor rather than the ceiling. So far, that has been the case.
When I wrote that I was thinking about oil in 2004. At the time I wrote that if oil could clear $40 a barrel and stay above that level, the $40 area could become the permanent floor.
And you know what happened after that. Oil kept rising, eventually trading at over $140 in 2008. And then the mass liquidation of assets occurred bringing oil down along with just about everything else. But when it traded down to $40 (late 2008 and early 2009) it found support and currently is back up in the high 70′s.
Well, this morning here’s what I read from Dr. Marc Faber:
“Gold won’t fall below $1,000 an ounce again after rising 27 percent this year to a record as central banks print money to help fund budget deficits, said Marc Faber, publisher of the Gloom, Boom & Doom report.
The precious metal rose to all-time highs in New York and London today as the dollar weakened. The Dollar Index, a gauge of value against six other currencies, has declined 7.9 percent this year and today fell to a 15-month low. News last week of bullion purchases by the Indian and Sri Lankan governments raised speculation that other countries would follow suit.
“We will not see less than the $1,000 level again,” [my emphasis] Faber said at a conference today in London. “Central banks are all the same. They are printers. Gold is maybe cheaper today than in 2001, given the interest rates. You have to own physical gold.”
China will keep buying resources including gold, he said.
Faber is making more of a bold prediction than I would make. But I sure wouldn’t be surprised if he’s right.
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