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The arguments for gold to rise dramatically are well known and highly publicized. The arguments for gold to remain flat or to decline are minimally discussed (and generally attacked vigorously when raised). [I do just that in this article and the conclusions will not be liked by the goldbugs.] Words: 285
So says an article* by StopAlerts (https://secure.stopalerts.com/) as posted on Seeking Alpha under the title Gold Price Plausibly $1,300 In A Deflation Scenario.
Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.
Edited excerpts from the article are as follows:
It would seem to us that inflation and debt repudiation are the two principal ways the developed world can get out from under its debts. That would create a long-term upward path continuation for gold.
However, in the short term, there is a deflation scenario not too hard to imagine given the slowing of world GDP growth. That would create more downward pressure on gold prices, assuming the fear factor did not overwhelm the deflation concern.
In 2008, when deflation was highly anticipated, gold declined about 30%. Today, deflation is being discussed, and gold is languishing.
(click to enlarge)
If a 2008-like concern about deflation should recur, gold could conceivably repeat a 30% decline [like] it saw in 2008. That would put gold at around $1,300. Short of that, something more like $1,500 is a visible chart support level.
(click to enlarge)
We are in a government actions and event driven world more than usual at this time, and anything could happen. Gold could spurt in either direction in the short term.
Conclusion
We expect gold solidly up long-term, but see the reasonable possibility of a significant decline from here if deflation concerns continue to rise among the investing public. The fiscal cliff could certainly cause that to happen.
*http://seekingalpha.com/article/949721-gold-price-plausibly-1-300-in-a-deflation-scenario
Editor’s Note: The above post may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.
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