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Posts Tagged ‘Gold Price Target’

Oct

2011

$10,000 gold doesn’t sound that crazy anymore

by Fred Mason

I’ve been listening to The Financial Sense Newshour with Jim Puplava for about two years now. The host is unabashed about his bullishness on gold, but he backs it with logical arguments, and it’s been difficult to argue with his stance that gold is going to keep going up until we see some new form of non-fiat currency.

It wasn’t until this week, though, that I heard Mr. Puplava actually give a price target on the metal:

“We aren’t even close to where I see the price of gold and silver going. We’re probably in the second phase of this bull market. Wait until we get to the third phase of this bull market where I think you’re going to see prices closer to $10,000. I know people probably think I’m nuts saying that, but I can make all kinds of fundamental reasons why we think that’s where we’re eventually going to end up.”

Mr. Puplava attributes the rise in gold to one thing: money-printing at, not just the Federal Reserve, but by central banks and governments around the world.

“The debt issue, as Reinhart and Rogoff have told us in This Time Is Different, it takes about 10 years to work those things off.

“We’re only four years into a 10-year debt cycle work-off. So we have another six years to go, and does anyone believe that governments are going to stop printing money? I mean just take a look at what they’re talking about bailing out, back-stopping, quantitative easing, they have all kinds of fancy names for it, but we all know what happens when they do this kind of thing.”

It turns out Jim Puplava’s not the only one who thinks we could see gold at $10,000 an ounce. Nick Barisheff (the CEO of Bullion Management Group Inc.) is actually working on a book titled “$10,000 Gold – Why it will get there sooner than you may expect.”

“Unless current monetary policy is drastically changed, it will almost certainly rise to $10,000 an ounce and beyond,” Barisheff writes (per ResourceInvestor).

He believes three facts are contributing to gold’s ongoing march toward five digits:

The loss of purchasing power of global currencies
The inflationary effects of money creation
Irreversible trends (an aging population, peak oil and outsourcing) will continue to cause gold to rise

Barisheff goes onto point out what I think most outsiders fail to miss when they’re thinking about gold: it doesn’t rise in value. It’s only going up in price because the value of our dollars, euros and yen are falling.

And, if you fall in their camp, you’ll probably come to the same conclusion they have: the fiat currency system that President Nixon implemented in 1971 is on the verge of collapse. And until we get a new currency, gold, silver and other hard assets will be the only vehicles we’ll have to protect the assets we’ve a worked a lifetime to accumulate.

ARTIFICIALLY LOW? What is gold price suppression?	THE WHITEST MONTHS Seasonal silver charts say now’s the time to buy
WHERE ARE WE GOING? Short-term gold and silver price targets	2008 REDUX 8 signs we’re headed for a bear market in stocks
OUR SHELVES ARE EMPTY Silver coin shortage reeks of price manipulation?	WHY THE TREND WILL CONTINUE 10 reasons why we’ll see gold over $2,000 an ounce

Tags: gold price forecast, gold price predictions, Gold Price Target
Posted in gold, gold stocks, mining stocks, precious metals | No Comments »

Oct

2011

Short-term gold and silver price targets

by Fred Mason

Despite a two-day rally in stocks and precious metals, I’m still bearish in the near-term (see my post 8 signs we’re headed for a bear market in stocks for more). One of the biggest indicators that we’re in for a rough patch is the rapid climb in the volatility index (the so-called “fear gauge” for the stock market). The VIX spiked early in August and it’s yet to taper off:

(Click to enlarge)

Typically, gold and silver act like hedges against market uncertainty, but the recent turmoil in stocks has me feeling like this isn’t typical market uncertainty. It feels like it could be something worse.

And when things really go south in the markets, there is no true hedge outside of cash. We learned that in 2008 when gold slumped 30 percent from $1,010 to $700 an ounce and silver shed nearly 60 percent from $21 to $9 an ounce.

Of course, history might not repeat itself (despite warnings of a recession from the ECRI). And there are quite a few investors who are still bullish in the near-term for gold and silver prices.

MF Global’s Tom Pawlicki is calling for gold to advance to $1,700 and silver to move toward $33 an ounce in the short-term (per Barron’s). Technical traders argue gold’s still in a four-week-old downtrend (per Kitco). If gold closes both $1,535, expect more selling. If it closes above $1,705, it could be time to get bullish.

For silver, bulls are looking for a close above $33.58 and bears are looking for a close below $26.15 (again per Kitco).

Today’s non-farm payroll report could determine the direction for gold and silver prices for the rest of the month. “Many think (the jobs number) could dash recession expectations or rekindle widespread macro economic uncertainty,” the CME Group said in a statement yesterday (per IBTimes).

It’s clear we seem to be at a turning point in the markets. And that’s evidenced by lower silver price predictions from leading analysts. TD Securities expects silver to average $36.11 per ounce this year and $39 an ounce in 2012 (per ResourceInvestingNews). That’s roughly in line with predictions from Credit Suisse. They expect silver to rise to $33.70 in 2012 and taper off to $30.60 an ounce in 2013. Credit Suisse also points out that another silver price sprint to $50 an ounce appears to be “increasingly unlikely.”

Natixis Commodity Markets sees silver averaging a ho-hum $27.50 an ounce in 2012 on decreased industrial demand, and gold at $1,450 an ounce.

The only thing that has me feeling like we might be near a bottom in silver prices is the fact that no one’s making bold predictions of $100 silver or $250 silver like they were this spring. That only happens when prices are in a strong uptrend, and the lack of bold predictions and media coverage could be the perfect buying opportunity as the precious metals consolidate.

“It would be quite conceivable to see silver test the strong support area at $20, but that gift would really be too much,” writes Warren Bevan at Goldseek. “Already, with this nice decline refiners are struggling or simply can’t keep up with demand.”

Indeed, the only place we’ve really seen increased demand for precious metals is in the physical coin and bar market. Those are investors who are in for the long-haul, though, and that doesn’t necessarily bode well for the short-run.

THE WHITEST MONTHS Seasonal silver charts say now’s the time to buy	SILVER ISN’T THE ONLY COMMODITY BEING MANIPULATED What is gold price suppression?
HERE THERE BE MONSTERS 8 signs we’re headed for a bear market in stocks	GOLDEN MINING STOCKS Up 180%? 10 best gold and silver stocks returns year-to-date
THE NEXT GOOGLE The unofficial tech IPO calendar for 2012	AFTER THE PLUNGE Can silver prices bounce back in October after 27 percent decline?

Tags: gold price predictions, Gold Price Target, silver price forecast, silver price predictions, Silver Price Target, Vix
Posted in gold, gold stocks, mining stocks, precious metals, silver coins, silver stocks | No Comments »

Sep

2011

Revising gold price targets for 2012 after the plunge

by Fred Mason

It’s difficult to downplay the severity of the sell-off in gold. Just a week ago, the yellow metal closed at $1,805 an ounce. Since then, it’s fallen as low as $1,540 – a loss of 14 percent. Silver prices have performed even more dismally dropping 35 percent from a peak of $40 an ounce.

After the sell-off, gold is still up 15 percent on the year while silver’s just about flat. The scary part is (as Eric Fry at Daily Reckoning points out), U.S. Treasuries have actually out-performed precious metals! The 20+ Year Treasury Bond ETF (NYSE:TLT), for instance, is up nearly 25 percent since Jan. 1.

“That’s right,” Fry writes, “the debt securities of the now-AA-rated and heavily indebted US government remain the safest safe haven around.”

That’s a sign that investors are losing faith that the recovery we’ve been promised – despite the near-zero interest rates and the $2.3 trillion the U.S. government has pumped into the economy since 2008 – isn’t coming.

Fears of a 2008-style global financial meltdown feel almost palpable. In the words of Nouriel Roubini, we’re facing “unending stagnation, depression, currency and trade wars, capital controls, financial crisis, sovereign insolvencies, and massive social and political instability.”

It’s hard to stand by your investments when you hear economists telling you to stock up on food and make sure you have access to an isolated safe house. The moves in gold prices have even hardened gold bugs wondering whether or not they should stick with the metal.

And no one seems to know for sure where prices are going to go in the near-term. Daily Reckoning’s founder Bill Bonner sees the potential for gold to tumble as low as $1,000. Momentum traders see gold prices touching $1,517 an ounce and silver hitting $22.45.

“Following this rebound (in gold prices), which I expect to get underway this week, there will be a longer slowdown,” GloomBoomDoom analyst Marc Faber told CNBC Tuesday. He says the metal could fall as low as $1,100 an ounce.

Famed commodities trader Jim Rogers seems to concur. “I have no idea what is going to happen this year. I doubt if it will go to $2000 an ounce in 2011, it is more likely to have a correction which will last for several weeks, several months,” he told India’s Economic Times.

Despite their dire warnings about gold prices in the near-term, though, all of the traders mentioned above are unanimous in arguing that this is just a temporary set-back for precious metals.

“Silver has been one of your favourites, but that is down 24% in the past week,” the Economic Times asked Rogers. “Are you still buying?”

“Not yet,” Rogers replied, “but if silver continues to go down as we have discussed before, I will buy more silver too. Do not sell your silver, do not sell your gold unless you are a short-term trader, but anybody who is in this for a long term, silver and gold will both go much higher over the next few years.”

While the pros haven’t started down-grading their gold price targets for 2012 yet, they’re certainly not saying we’re going to hit $2,500 an ounce anytime soon. One ominous research fact points that it could be a long time before we even see gold at $1,800 an ounce again: The gold market has only dropped 20 percent peak-to-trough twice in the past 10 years (per the Financial Times). It happened once in 2006 and once in 2008. In both instances, it took about 18 months for prices to re-touch their highs.

We’ll eventually see gold at $2,000 an ounce (reference my post 10 reasons why we’ll see gold over $2,000 an ounce). These dips are painful, but they’re definitely buying opportunities for patient and disciplined investors.

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Tags: gold price, gold price forecast, gold price predictions, Gold Price Target, silver price forecast
Posted in gold, gold stocks, mining stocks, precious metals, silver stocks | No Comments »

May

2011

3 reasons to move from silver into gold

by Fred Mason

The manic rise and fall in silver prices over the past few months has a lot of precious metals investors re-assessing their holdings. In the near-term, it looks like gold bugs have the upper hand. Here are three reasons why the yellow metal will likely out-perform silver in the months to come:

1) Slow and steady wins the race. The fundamental case for gold and silver hasn’t changed, but investor perception has. Whatever the cause of silver’s violent 30 percent plunge, the aftershocks of that move will likely continue for several months. Meanwhile, gold’s proven that its support won’t be knocked out so easily. Over the past month, the iShares Silver Trust ETF (NYSE:SLV) has shed nearly 18 percent of its value. The SPDR Gold Trust ETF (NYSE:GLD) has actually appreciated 0.4 percent during the same time span. That shows unflappable support for the yellow metal even as panic seemed to set in for commodities across the board. When the muck truly hits the fan, there’s nowhere safer than gold.

2) A ratio gone mad. There’s been a lot of speculation about the gold:silver ratio of late. Silver bulls like Eric Sprott of Sprott Asset Management – which manages the Sprott Physical Silver Trust ETV (NYSE:PSLV) and the Sprott Physical Gold Trust (NYSE:PHYS) – have been calling for titanic shifts in the ratio. Sprott’s actually argued that the gold:silver ratio could fall as low as 10:1 (meaning gold would cost just 10 times as much as silver). If that were the case today and gold stayed at $1,491 an ounce, we’d be looking at silver prices around $150 an ounce. Perhaps such a move will be possible over the course of several years, but don’t expect it over the next few months. Since the 1980s, the gold:silver ratio’s been closer to 60:1, which means $25 silver is just as likely as $150 silver (in fact, it’s probably MORE likely). In the words of Dave Kansas at the Wall Street Journal: “It’s more likely that the ratio will revert to modern-era norms rather than race back to the Napoleonic era.”

3) Silver ETFs push down prices. One of the most powerful drivers of silver prices today comes from physical silver ETFs. These stock market vehicles use the cash they get from issuing new shares to buy physical silver. Conversely, when the price of silver falls, ETFs like the SLV must liquidate their physical silver holdings to buy back shares. When the market’s trending up, the SLV can accelerate the rise in silver prices. During extreme silver sell-offs, SLVs decline floods the silver market with excess supply.

“On May 4th as silver plunged below $40, SLV experienced such heavy differential selling pressure that it was forced to liquidate 4.8% of its holdings in a single trading day!” writes Adam Hamilton and Scott Wright of the Australian investing site, TheBull. “This was 16.8 (million) ounces of physical silver that hit the markets!” That’s an enormous amount of silver. Hamilton and Wright point out that it’s 60 percent of Silver Wheaton Corp.’s (NYSE:SLW) silver output for an entire year, and it hit the market in 6.5 hours!

Gold’s stability in the face of panic selling in the silver market is evidence that gold holders have the stronger hand. More selling in the silver space, though, could be on the slate as the gold:silver ratio moves back toward reasonable levels. The ratio hasn’t fallen as low as it did last month in 30 years, after all. Interpret that how you may, but I see it as evidence of an anomaly that’s in the process of correcting.

THE DEATH OF THE DOLLAR

Gold standard in the U.S. by 2016?