Gold prices - Are there any limit?

FOR IMMEDIATE RELEASE
(Free-Press-Release.com) November 30, 2009 -- "“It gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head.”

– Warren Buffet, talking about gold.

Many agree with that this is a speculative rally - not driven by real demand. Even largest consumer of gold (countries) are seeing slump in Gold purchases. However, it is also a fact that Central banks are net buyers of gold for first time in 22 years...

Precious-metals research firm GFMS reports central banks around the world bought more gold in the second quarter than they sold for the first time since 1987. And consider this:
• Amount of gold France will sell this year: zero
• Amount of gold Germany will sell this year: zero
• Amount of gold Switzerland will sell this year: zero

China and Russia are buying gold, several European countries have ceased selling their gold, and central banks are net buyers. Wall Street is also piling into gold. John Paulson, the most successful money manager of 2008, has made a $4.3 billion bet on gold and gold stocks. David Einhorn, Paul Tudor Jones, and Jim Rogers have all purchased gold this year, too.

And just last week comes this news from the Financial Times: The world's wealthiest families are also switching to gold. "Two-thirds of the 100 respondents to a survey by the Family Office Channel, a new website, said that super-rich families are now more likely to invest in gold and other commodities.

CONCLUSION

It's a combination of both investor sentiment and real market dynamics. We need to be careful here. If investor sentiment gets to a point of manic extreme, as history suggests it might, gold will eventually thrust into a bubble that can, and will, only end one way. Think about the frenzy that drove oil into the 2008 peak at near $150 before collapsing back to under $40 within a few months. Everyone developed the belief that we were going to run out of oil within the next several months. Those beliefs were completely unjustified. At the time that oil was still heading up toward the peak at near $150 per barrel, it was nearly impossible to conduct a rational conversation regarding the possibility that we had over priced oil. Most people were firmly entranced in the belief that oil prices were on the way to $1000 and higher, and had no interest in discussing other possibilities. While it's true that oil is a limited supply commodity that will eventually be depleted, our minds ran a muck and we drove oil to a point that was completely factually unjustified. If we are not careful we may do the same with gold.

SIMPLY

Keeping in consideration all what is said above; even then our technical analysis are saying that Gold prices are NOT likely to stay at or above $1,200 for long.

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