Tuesday, August 30, 2011

Celente 100% in Gold; Rips Roubini

King World News has interviewed forecaster Gerald Celente about gold. Here are the takeaways:

I began trading gold in 1978 and my first buy was at $187.50 an ounce.  What’s not being talked about in this gold boom is what was going on back then that’s so different than today.  So as you hear people saying it’s a bubble (gold) and making comparisons, they really don’t know what they are talking about because they are leaving out a very important element.

Back then it was only the United States that was trading in gold and it was relatively new.  Let’s remember it’s ‘78 I’m talking about and Nixon had taken the US off the final peg of the gold standard in 1971, so the whole game was relatively new.  I remember how difficult it was even to learn how to play the COMEX markets or to buy gold, not many people knew how to do it back then...

One of those summers (back in the ‘70s), I remember when I was new in the game, a young guy, but I remember gold started going up dramatically.  And I also remember a summer of discontent under Jimmy Carter, when he was firing half of his cabinet.  It’s very, very similar to what’s going on now in the summer of 2011, how things mirror in a very strange way what was going on back then...

What did (Nouriel) Roubini say?  Gold would be lucky to go to $1,100 an ounce.  Where is it now?  Flirting between the high $1,780s and $1,900s.  There are a number of people like myself and others that believe it’s going much higher.  You know I used to be in Swiss Francs (along with gold), I am not in Swiss Francs anymore.  I got in (Swiss Francs) about a year and a half ago and did very well, but I’ve transferred everything I own into gold, I’m now totally invested in gold.
Celente is very correct, although the Obama Administration is very similar to the Carter Administration in the malaise around the country. The big difference is that the Fed is pumping much more aggressively, which will result in very strong price inflation, but more people understand the value of gold as a price inflation hedge.

As I pointed out in my post, The Case for $25,000 per Ounce Gold:

...the number of Americans who actually own gold is likely under 10%. The question must be asked, "What happens if price inflation really accelerates at some point, as it is likely to do?" The answer most likely is that many more will flock to gold.

In the old days, if price inflation pushed prices up over a few years by 100%, gold would likely climb by as much. Based on its present conditions under this scenario it could climb to roughly $3,000 area, as gold bugs continue their steady buying. But what if the next massive price inflation brings with it a flight away from the dollar as a reserve currency and causes the number of owners of gold in the United States to climb from under 10% to, say, 50%? This would result in huge new demand for gold. Instead of stopping at $3,000 per ounce, gold would be a multiple of that price. $25,000 per ounce would not be out of the question.
Remarkably, Roubini claims he doesn't believe such a climb inn the gold price will occu,. But it is a very real possibility, especially since Roubini's buddy, Ben Bernanke continues to print and print dollars.


  1. Nearly all of history's great bubbles sucker in the street long toward the end. What was retail doing when price dipped over $1900? They were selling:


    The "bubble" in gold will be over when the street is standing in line to buy back its gold at much, much higher prices.

  2. Roubini was dead wrong about gold's value today, so why should we listen to anything else he has to say about gold?

  3. I suspect many of this site's readers are familiar with some of the more popular forecasters out there such as Jim Rogers, Marc Faber, Peter Schiff, Gerald Celente, and of course our very own Robert Wenzel.

    I have a deep respect for all these men and have followed them for more than 3 years (excluding Wenzel who was discovered through Schiff's radio show). In this group Celente seems to have the least firm grasp of economics and I find his forecasts to lack substance on many levels. Lately, he seems to prefer shouting his talking points during interviews. Those points don't seem to have chaged in any meaningful way over the last 18 months or so. Also, his calls for and preference of direct democracy unnerve me.

    Don't get me wrong, I think being in all gold is a decent play and I think he'll make a lot of money doing so.

    He seems like a nice guy and I love his sense of humor, but I don't think he's a good bellwether for future trends based on his own analysis or understanding. I think he (smartly) follows Schiff and Faber pretty closely and relies on their expertise.

    Mr. Wenzel, and readers of this site, is there anything particular about Celente that you favor? Other than mentioning his gold positions for the sake of gold, is there another more important rational behind mentioning him like is done with Roubini? Does Celente have 'great insider connections' as well?

  4. So do you recommend any hedging in francs? Switzerland has been working of late to weaken the franc, and the crash of the dollar seems as though it would probably impact all fiat currencies, including the franc. Also, the franc IS still a fiat currency. But would it be wise to keep at least a couple K in francs?