Gold

[Captain Zissou]

I had an economist once tell me that gold never changes in price.  That what changes is the value of the currency used to purchase gold.  According to his view, we are not seeing an increase in the value of gold, but a decrease in the value of the dollar and other currencies used to buy gold.

He pointed out to me that in 1890 an ounce of gold would purchase a good man's suit and the same is true today at $1050 per ounce.

Interesting perspective.

Exactly right.  Commodities, especially gold, are a hedge against inflation.  Gold will always be worth about the same, as will most other comodities.  The difference between gold and a nice mans suit is that gold is readily exchanged into currency.  So yes, by saying gold will go to 2K, I'm really saying that the dollar is SOL.

[samiam]

This is a pretty good read.
http://www.telegraph.co.uk/finance/newsbysector/industry/mining/6546579/Barrick-shuts-hedge-book-as-world-gold-supply-runs-out.html

[mtraininjax]

So yes, by saying gold will go to 2K, I'm really saying that the dollar is SOL.

This is a huge runup in Gold over the last few weeks. Watch for selling as the markets need to absorb the runup. Plus the dollar can't stay low forever, and the Fed has said it will STOP buying Treasuries in March. When that happens, you better hope you are not in Gold, you will see the dollar climb and gold will fall.

[Dog Walker]

There was an article in the NYT yesterday about how gold production has declined and is rapidly declining all over the world.  They called it "peak gold".  If what we have now is about all we are ever going to have then the whole nature of gold trading is going to change; i.e. demand continues flat even with increases in population then price will still rise.  Demand goes up due to rise in population or hedging against inflation then long term price is going to go up a LOT!