Dear Friends,
In order to achieve $1650 you must first see $2000 in print. Wait and see what they are saying when we are trading at $1650.
Think about the following excerpts from the article below while keeping in mind the successful juniors are the producers of new resources.
?It is difficult to see where the extra supply would come from as mine output struggles to grow.?
?Recent evidence shows that the central banks of Russia and Argentina are buyers. It is also rumoured but not confirmed that the central bank of China and other sovereign wealth funds are also buyers. As these possible central bank buyers have trillions more cash than the Western central banks have gold, it is very easy to envisage a scenario where the central banks in aggregate turn into net buyers - even if certain western central banks continue to sell.?
Gold: the precious laggard that will hit $2,000
By Ian Williams, Charteris Treasury Portfolio Managers
Last Updated: 4:25pm BST 04/07/2008
In 1999 when oil was $10 a barrel, I suggested that the price would ride fivefold to $50 a barrel in real terms over the next few years. This forecast was dismissed with incredulity at the time. Almost 10 years later with the price over $130 a barrel, my original forecast turned out to be rather timid - with mainstream commentators now forecasting $200 a barrel.
My forecast was based on an analysis of long term future supply-demand trends, combined with a study of ultra-long term commodity cycles.
What is striking about ultra-long term commodity cycles is how seemingly unrelated commodities appear to rise and fall together.
Price data shows that around 1999-2000, virtually every single commodity hit a significant low before turning up sharply. Nickel hit a low before proceeding to rise ten-fold in the period up to April 2007. Similarly copper also bottomed around this time before an eight-fold rise up to May 2006. Copper is once again challenging its all-time high and looks set to move into new high ground.
The reasons for this stellar performance are now well-trodden - the emergence of China, India and Russia - as major consumers of scarce and in some cases increasingly finite resources.
This commodity super-cycle phenomenon shows no signs of abating. But to profit from it, investors need an understanding of the leads and lags within the commodity family to avoid being caught buying a particular commodity at a short-term peak in its price. I would be very wary about buying oil assets at present - simply because the price of oil in relationship to other raw materials is becoming very stretched.
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