The latest gold price forecast for 2011? $2,500 an ounce, says JPMorgan

Interestingly, gold is the last of the major commodities that isn’t trading at or near all-time inflation-adjusted highs. $2,500 gold would put us near the 1980 peak for the metal, and it’s looking more and more likely.

There’s blood in the streets and that has a lot of investors trading their greenbacks for gold. The yellow metal surged through $1,700 an ounce yesterday to hit a new all-time high of $1,728.

We could be just getting started. Case in point: JP Morgan has raised its gold price target to $2,500 an ounce. Two analysts at the bank – Colin Fenton and Jonah Waxman – issued a new note to clients yesterday. In it, they argued the downgrade of U.S. debts will force markets lower.

“Before the downgrade, our view was that gold could average $1,800 per ounce by year end. This view will likely now prove to be too conservative,” they wrote, according to Reuters.

JP Morgan isn’t alone, either. Professor Charles Nenner of the Charles Nenner Research Center made the same proclamation on Breakout yesterday without giving a time-frame for his prediction.

“There’s an interesting situation that gold doesn’t seem to be bothered much by short-term cycles going up and and down,” he said yesterday. “Silver is but gold is not… I wouldn’t say it goes right up to two-and-a-half thousand from this level, but that’s our end goal.”

Conditions are ripe for surging gold prices. The CBOE’s Volatility index or so-called “fear gauge” rocketed up 50 percent yesterday. That’s the biggest one-day percentage gain for the index in more than four years, and it can’t help but remind investors of the harrowing days during the winter of 2009.

Interestingly, gold is the last of the major commodities that isn’t trading at or near all-time inflation-adjusted highs. $2,500 gold would put us near the 1980 peak for the metal (when we factor in inflation). And that makes JPMorgan’s predictions feel all the more likely – particularly with unofficial inflation numbers hovering over 10 percent.

If we do hit $2,500 gold by the end of the year, the metal will have shot up 44 percent from here and nearly 80 percent on the year. Not bad, considering most money market accounts are yielding just 0.28 percent!

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2 thoughts on “The latest gold price forecast for 2011? $2,500 an ounce, says JPMorgan”

  1. “Interestingly, gold is the last of the major commodities that isn’t trading at or near all-time inflation-adjusted highs. ‘

    Huh? Did someone forget about silver?

    1. Good point. I guess I should have said, “gold is the last of the major commodities that hasn’t tested it’s all-time inflation-adjusted highs this year.” Silver’s definitely looking attractive at current prices.

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