Golden CrestBand's report reminds me of Andrew Tobias' story of his 5000 silver dimes in his book Money Angles. (I knew it sounded familiar.) Tobias alludes to the story in a 2000 column.
Thu, 01 Dec 2005 17:17:30 ET
I don't often darken the door of a coin dealer's shop -- only when I'm selling. (I do most of my buying through the mail.) This afternoon, I saw on the Net that gold was trading at an 18-year high, just over $500 an ounce. That was Mozart to my ears. So I hopped in the old van and drove as fast as I could to a shop 45 minutes away. It was time to unload most of my cache of gold coins.
Am I nuts? The dealer probably thought so. After I sat down in his disheveled office and he began examining my Double Eagles, he advised me, in a low but firm voice, to keep my coins. 'Chances are, the price of gold will be higher a year from now,' says he.
I loved it. Indeed, I was hoping the dealer would try to dissuade me from selling. That's exactly the psychology that prevails at every major market top. Did your stockbroker tell you to sell your NASDAQ darlings in March 2000? At the top, the promoters will always try to stop you from selling.
My thoughts ran back to my last visit to a coin dealer's, in April 1987. At the time, silver was at the top of a roaring bull market -- and I wanted to dump my silver dollars. (They've never fetched anywhere near the same prices since.)
I sat down and the dealer picked up the phone to call his wholesaler for a quote. 'Well, what did he say?' I asked. 'Biggest demand for silver dollars since January 1980. Everybody's buying.'
I stifled a smile. January 1980? That was the manic top, when silver hit $50 an ounce. (Even today, 25 years after that peak, silver is down 80%.)
'Sure you still want to sell?' he asked. 'Yep.'
Gold could certainly gain another $10-$20 from here without disturbing me in the least. I'm focusing on the next $100-$150 move, which I expect will be down. In 2006, the Federal Reserve's tight-money policy will bite a wide range of markets -- and the ones that will fall hardest are those (like gold) that have benefited the most from the easy money of the past few years.
If you own gold or gold-mining shares, don't waste a lot of time celebrating your good fortune. History shows that the great selling opportunities in hard assets slip away quickly, with little or no warning. Consider yourself forewarned!
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[12/8/05] On the other hand, toddfinances over at chuck_angels thinks gold is likely to see 4 digits.
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[12/11/05] Patrick Heller (I believe it's him writing anyway) says "in my judgment, there is little potential for a significant decline of 10% or more in gold and silver prices. There is a good possibility that we have already started the massive jump in precious metal prices similar to what we experienced in 1979-1980." He further makes the "mute"d forecast.
Gold: I think there is a 75% probability that gold will reach $600 by the end of 2006, a 50% chance that it will top $700, and a 25% chance that it could reach $1000. Even though these numbers might seem fantastic, I believe I am being conservative.
Silver: I expect silver to reach $10.00 by the end of March 2006. I give it a 75% chance that it will reach $15 by year end, and a one-third chance that it will pass $20.
As of November 30, the price for gold was $494.50 and the price for silver was $8.28. (This is from Liberty's Outlook, Liberty Coin Service's Monthly Review of Precious Metals and Numismatics where Heller is the Editor. I see that it's volume 11, issue 12. So by my calculations, that would make 132 issues that they have been bullish.)
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