time to get excited about gold?

with gold taking out new highs last night (at least when denominated in $US), i thought it might be timely to reflect on some past matters and consider what the future may hold.

almost 10 years ago jim sinclair (http://www.jsmineset.com/) made a "wild" prediction when gold was trading at around $US280 that gold would trade at or above $US1,650/oz ? he further narrowed that prediction by specifying an actual date, 14th Feb 2011. he also challenged any member of the financial media to a $US1m wager to prove him wrong ? understandably that bet was never taken up. well Jim was wrong (by 200 days to be absolutely precise) and that $US1m went begging. but I think it?s fair to say that, although his prediction was ultimately wrong, it was boldly and amazingly accurate in the broad sense.

in Nov 2009 the Reserve Bank of India bought 200t of gold from the IMF ? the average price paid was $US1,045/oz which put the total transaction at $US6.7bn. with gold at ~$US1,650 this represents near enough to a 60% profit ? a total profit of around $US4bn in less than 2 years, nice work RBI!
at the time it was widely believed that China had been outfoxed by India but it was also widely believed that China, being wise and inscrutable, would turn the tables (and more importantly not lose face) by snapping up any available IMF gold at a price below what India paid. sadly for China that opportunity never arose because gold has not fallen below India?s buy in price of $US1,045 since. in the past 2 months South Korea has bought 25t and now Thailand has bought 17.7t on the open market ? looks to me as though China has been well and truly outfoxed on this one and may have to pay a huge premium merely to save face from any further appreciation in the gold price.

in $AUD terms gold peaked at ~$AUD1,550 in Feb 2009. With gold currently at around $US1,650 and the exchange rate at 1.075, the price in $AUD is still a little short of that peak ?
$US1,650 with an exchange rate of 1.07 = $AUD1,542
$US1,650 with an exchange rate of 1.08 = $AUD1,528
$US1,650 with an exchange rate of 1.09 = $AUD1,514

Where to from here?
Jim Sinclair has been saying for some time that his $US1,650 prediction was much too low and, without explicitly stating his own prediction, is alluding to projections made by Alf Fields and Martin Armstrong of $US5,000 and even $US12,000 ? these numbers seem to be too outrageous for even Jim to embrace!
However he has stated that gold at $US1,764 represents a tipping point which may propel it into the stratosphere.
Ross Norman who, from his track record over a number of years, is regarded as the most accurate predictor of gold set his price for 2011 at $US1,850 early this year.
For my own part it seems that the stage has been set for gold at $US2,000 but I?m not prepared to speculate when or what that might equate to in $AUD terms ? it may be little changed from its current ~$AUD1,550.
No matter what the final peak might be, gold is where you want to be and hopefully MCO can serve some up for us. The less cynical of us might say that MCO gold production has been deliberately held back to take advantage of an ever increasing gold price.

go go MCO!