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Ian Campbell

Ian Campbell

Through his www.BusinessTransitionSimplified.com website and his Business Transition & Valuation Review newsletter Ian R. Campbell shares his perspectives on business transition, business valuation and world…

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Gold - Current Thoughts

It is said by many that gold is a store of wealth in the context of purchasing power. This is something I have been increasingly thinking about over the past several weeks as:

  • I see what I think is a deterioration in the Eurozone Sovereign debt issues;

  • many of the world's largest banks headquartered in Europe and the U.S. are ever more appearing to me (for the reasons that I have discussed in previous commentaries) to be large 'vibrating dominoes' lined up on a gymnasium floor - any one of which could topple and 'bring the house down';

  • the U.S. Super-Committee deliberations failed;

  • Washington appears to me not only to be more polarized than ever, but also 'out of constructive ideas' where the U.S. economic horse just might be too far out of the barn to be found, tethered, and brought back home; and,

  • I see what I think might be possible escalated societal unrest just around the next street corner in some European countries, the U.S., and some of the developing countries in particular.

So, I ask myself, why has the gold price stagnated in a U.S.$1,620 - $1,800 range since September 15, most often trading toward the lower end of that range in that period?

I have concluded that one important reason is that it is highly likely (based on my reading and thinking) that the financial markets continue to see the U.S.$ as a 'safe haven'. Said in a different way, I think the financial markets broadly see the U.S.$ the best of a bad lot, and are not as yet ready to 'give up on the fiat currency' system.

If I am right in this I have reached four conclusions:

  • I continue to think of physical gold as a safe haven in the context of long-term purchasing power.

  • I think it less likely than I thought three months ago that the price of physical gold is going to be heavily influenced in the short term (next few months) by escalated and escalating concerns over a post-2008 financial crisis.

  • I think it will take the actual fact of clear resolution to the European (including the United Kingdom's) and America's economic and financial woes (a highly unlikely outcome in my view) or a post-2008 financial crisis (a likely outcome in my view) to cause the price of gold to change dramatically below in the event of the former, or above in the event of the latter, a trading range of U.S.$1,500 - $2,000.

  • I currently think that for the price of physical gold to escalate beyond U.S.$2,000 the financial markets will have to seriously lose confidence in the U.S.$ as a safe haven.


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