Free Gold Price Calculator & Current Gold Prices

The Current Value of Gold – Will it Double?

The current value of gold can only tell us so much. You can check the price of gold today on our charts, and you can also calculate the value of your scrap gold using our scrap gold calculator. But what most of us would really like to know is this: how much will our gold be worth tomorrow?

According to economist and bestselling NY Times author Dr. Stephen Leeb, mass movements toward buying gold–and a record increase in gold prices–are on the horizon.

Here’s a look at Dr. Leeb’s views from an article at Beacon Equity Research’s website:

The dramatic move by six central banks on Wednesday to lower dollar swaps rates flashed a big red light to markets that liquidity, which has been drying up between banks in Europe, had become acute and created the risked of another 2008 Lehman-like meltdown event, taking the U.S. banks along with Europe’s down the path to Armageddon.

“There are liquidity concerns right now. I think the world, and in particular Europe, really does have a liquidity problem,” Leeb told King World news on Monday. “If Europe has a liquidity problem that obviously has the potential to affect everybody, especially the U.S.”

Contrary to claims made by U.S. bank executives and analysts, featured endlessly on television programming (especially BofA’s cheerleader, Dick Bove), that U.S. banks are only marginally exposed to European sovereign debt defaults and could weather the storm, advisor to the IMF, Robert Shapiro, told the BBC that nothing that analysts such as Bove have said about the low possibility of a contagion in the U.S. could be further from the truth.

“If they [EU] cannot address the financial crisis in a credible way, I believe within perhaps 2 to 3 weeks we will have a meltdown in sovereign debt which will produce a meltdown across the European banking system,” said Shapiro. “We are not just talking about a relatively small Belgian bank, we are talking about the largest banks in the world, the largest banks in Germany, the largest banks in France, that will spread to the United Kingdom; it will spread everywhere because the global financial system is so interconnected. [emphasis added]

In fact, one could argue that the Panic of 1907, which created systemic collapse on both sides of the Atlantic following the banking system collapse in the U.S., serves as a fine example of what would most likely happen to U.S. banks if Europe’s financial system collapses, as a higher degree of interconnectedness between many more banks between the U.S. and Europe exists today.

Following the announcement of Wednesday, initially, gold and stocks soared on the news of the central bank coordinated effort to ease the liquidity (ultimately solvency) strains, but, not unlike 2008, gold has since come under pressure.

According to Leeb, the weak hands of bankers need to raise capital, which leaves the most liquid asset they’ve got to raise quick cash, gold. But not to worry, said Leeb, the snap back to higher gold price could be as fierce as it was in 2008. He, instead, suggested preparing for the volatility lower in the price of the yellow metal prior to its glorious “rubber band” launch higher.

Don’t fight the inevitable volatility, instead, embrace it as fact of life during the bull market in gold, according to Leeb.

“We did see a similar event back in 2008 where gold dropped on liquidity needs,” he said, “but once central banks got their act together and once liquidity was flushed into the system, gold took off like a rocket ship. So you just have to expect this in the kind of world we are in.

“This is the kind of world that is consistent with a very powerful and persistent bull market in gold and it will carry many, many times higher than the gold price is today. But those very conditions are going to be conditions that do lead, from time to time, to liquidity crises.”

Dr. Leeb goes on to say that the decrease in the current value of gold is a sign that gold is good investment. In this piece of the article, he explains why:

I can say this, right now is no time to back out of your gold position. I mean gold going down is telling you why it’s such a good investment,” Leeb explained. “It’s is literally being used as liquidity because conditions are so dire.

“Any way to correct these dire conditions is going to involve massive amounts liquidity. So buy gold on these dips and say, ‘This is a gift that will reward me in the next twelve months by at least a double or more.’ Let me put it this way, it’s a rubber band, the further gold goes down now, the more it’s going to bounce back.”

What do you think? Is the decrease in the current value of gold a sign that we’re going to see skyrocketing gold prices? Share your thoughts with us by leaving a comment. And to take a look at the full Beacon Equity Research article, click here.

No Comments

Comments are closed.