How high can the gold price rise

World renowned gold analyst Alf Fields explains that we are in the early stages of a massive rise in the price of gold.

Knowledge is power; knowledge is profit

“Manipulation can not last forever against the primary trend. It can happen in the short and medium term, but eventually the facts involved in the primary trend will overwhelm the manipulators” – Alf Fields

What are the reasons for analysts not promoting and advising their clients to buy gold?

Analysts have a low tolerance for conspiracy; analysts like transparency and clear cut facts and figures to determine what companies or products they invest in.  They do not like confusion.  Currently there are conspiracy theories about why gold remains so low on an inflation adjusted basis.

The gold price has been manipulated for ages.  This has been admitted by several monetary authorities.  Even mainstream commentary on CNBC (see video below) has discussed the ongoing manipulation of markets.

And Goldman Sachs has admitted its software can manipulate markets in unfair ways.

Why do central banks sell gold into the market? 

The simple answer is that they want to prolong the life of the irredeemable bits of paper that they issue as money.

Gold is produced for accumulation and not for consumption. This makes gold unique. The reason gold is accumulated and not consumed is that over time it retains its value, and historically, in times of trouble, people have used gold to preserve their wealth.  Because gold seems to have limited use – only a little is used industrially, and most consumption is in the form of jewellery, analysts don’t feel they need to be involved.

Of course this is completely ignoring any investment demand. Most analysts today are young, and very few have been taught monetary history. Very few know the attributes of gold, and as such have no concept of its nature as a store of  value.  There is a huge education problem out there; an extremely widespread lack of financial knowledge, and this has led to a huge investment opportunity in gold.

What is the most important investment factor over the next 3 to 8 years that will create this huge opportunity in gold?

The most likely answer is that the US dollar is not going to be around in 5 years time. And there are several reasons why.  Most of the reasons start with the letter ‘D’ – as pointed out by Alf Fields in the accompanying video below, made in 2005, and starting now to look quite prescient.

• Deficits
• Debt
• Dollar
• Demographics
• Derivatives
• Devaluation
• Deflation
• Dwellings (as in Real Estate)

All of the above contain within them the seeds of an upcoming crisis. As each crisis comes to a head, the most likely response of the monetary authorities is to run the electronic money presses ever faster, thus increasing the money supply in an exponential fashion.

Will it be similar to the hyperinflation period of 1919 to 1923 in Germany?

It only took 4 years for the Germans to wipe out the Reichsmark, and they didn’t have an electronic printing press.

Well, if you follow what Alf Fields has to say, gold appears to be on its way to USD10,000 an ounce.  For gold to head towards USD10,000, the world would more than likely have to experience a systemic currency meltdown.  A systemic meltdown would come about by central banks around the world throwing money at the banks and corporations that are in deep trouble.

As a result of this massive increase in the money supply, currencies would experience destructive downtrends in their values.  Destruction of the value of paper currencies would result in a rapid increase in the gold price.

With gold at US$935 an ounce right now, we are in the early stages of what in technical analysis terms is called Major Wave Three which has an upside objective of $3500.

1. Major ONE up from $256 to $1,015 (actually 4 times the $255 low);
2. Major TWO down from $1015 to $699, say $700 (a decline of 31%);
3. Major THREE up from $700 to $3,500 (a Fibonacci 5 times the $500 low);
4. Major FOUR down from $3,500 to $2,500 (a 29% decline);
5. Major FIVE up from $2,500 to $10,000 (also a 4 fold increase, same as ONE)

While prognosticating on specific prices is a no win game, in the video below Alf has been “on the money” so far in many repsects about the overall themes of this crisis and so his price forecasts really do warrant  some close consideration.  And with the price per ounce still below $1000 it would seem that it is still a good time to buy gold.

http://www.youtube.com/watch?v=bKjwHvDjBWw