Sounds Like Broken Records
By Jon Nadler
A year best-forgotten
in many ways, finally comes to a close today.
Many on Wall Street as well as Main Street wish
they had windows that open, so that they could
throw some investment account statements out of
them, along with the desk calendars that
normally fly at this time of the year. This was
a year of unsavory records, to say the least.
Some 30 trillion dollars were wiped off the
slate of market valuations. The year-end tally
for crisis-related write-offs came in at $720
billion. The average US home fell nearly 20%.
And then, to cap the list of such dubious
records, there was Bernie "Made-off" who may go
down in the books as the biggest swindler in
history. The list of failures or near-failures
includes the very pillars of the financial
Parthenon: Bear, Lehman, Merrill, Goldman,
Morgan Stanley, WaMu, Citi, AIG, GM, Chrysler,
UBS, and then some. The list is too long to
recall them all. Other spectacular failures
include commodities such as crude oil (down 64%)
and copper (down 56%). Add China's Shanghai
Composite (off 65%) the S&P (lost 39%) and the
Nikkei 225 (fell 42%), and record drops in the
Aussie, New Zealand, and Canadian dollar versus
the greenback and you are starting to get a
fairly good picture of what the past twelve
months have wrought.
Against this bleak background, we superimpose
gold. While eking out a near- 3.00% gain after
eight continuous years of far better showings
may not make it into gold's own record books,
the metal did that which we had theorized about
for some time now; preserve capital by becoming
a reverse hedge and falling less than other
assets. Should the deflationary maelstrom
intensify in the coming year, gold will not
remain immune from price declines. Our hope is
that it repeats this year's trend of becoming a
reverse hedge. Any combination that includes the
word "hedge" when it comes to describing gold is
just fine by us.
That said, herewith the projections for gold
prices in 2009. The trading range will likely
remain as wide as this year's $350 while
volatility will remain an integral part of
daily, weekly, and monthly swings. Prices might
touch $630 on the low side and $980 on the high
side - however, factor in some imponderables
(severe deflation and/or catastrophic
geopolitical developments) and one could augment
either end of the scale by $100. Barring the
latter, the average gold price will likely
register near $810 per ounce, following its $871
average for the current year.
Silver is projected to trade in a wide range as
well, almost as broad as that seen in 2008. Lows
could come in in the mid- $6 range, and highs
near $14 per ounce, with an average closer to
$10.50 for 2009. This year's cumulative average
was $15 per ounce.
Spot dealings in New York aimed significantly
lower as the final session of 2008 ran its last
lap before an early close. Bullion started with
a $16 loss at $858.30 this morning, pressured by
a surge in the dollar to 81.21 on the index and
a sharp drop in crude oil to under $37 per
barrel. Silver lost 17 cents to start at $10.75
while platinum hovered at $900, losing $11.
Palladium fell $1 to $183 per ounce. Initial
jobless claims fell by 94000 last week, although
overall unemployment remains at a 26-year high.
Thus, we close the chapter that was 2008.
Grateful that the core insurance position of
10-15% in gold remains as justifiable as ever,
and that the metal acquitted itself honorably
during difficult times.
We close with - what else? The list of 10 worst
predictions for 2008. No, these are not the
declarations of $1200 or $2200 gold or $200
silver that we were once again guaranteed in
2008. Those were not worth mentioning when they
first saw the light of day. The list is a
smorgasbord of really bad calls, ranging from
politics to markets. Courtesy of Foreign