At gold’s present rate of return, we’ll see gold price at at least $1400 an ounce in one year. Remember that just a year ago gold was still testing the $1000/oz. mark. And so this estimate of gold rising by another $200 already starts to seem conservative. If gold’s pace of increase is quickening, we will only need to see another problematic headline out of Europe or another bad month of job losses in the U.S. to send gold higher again.
—> $1700? See the December 2010 Update on Gold <—
Recall that just a week ago, the price of gold was still sitting back in the risk slump following a period of no bad headlines out of Europe. Gold oscillated between $1180-$1195 for a while.
All of a sudden, now, with the 131,000 job losses (July) in the U.S., gold has hit its catalyst for beginning the seasonal upswing in precious metals performance.
Reasons Why The Price Of Gold Is Rising
Gold Buying Season Begins
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Seasonal investors know that this is the time of year when mass purchases of gold often begin for jewelry manufacturing, in particular, in India. This still represents only a fraction of gold’s appeal worldwide, but it does take a drain on supply.
Couple that with the typically problematic September-October period for stock markets, and the price of gold is bound to climb more with seasonal risk aversion. Since last year’s markets sent gold up past $1020 in a short period of time, I expect that this season will see gold break out past its recent high of about $1247 an ounce.
August Might Be the Best Time to Buy Gold
New Record for Gold Price
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Realistically, I think we could see gold quickly break out to $1260 or even $1270 in short order if anything dismal and unexpected to the downside occurs in the equity markets. Maybe it’s another flash crash, maybe it’s fundamentals – continued commitment on the part of the Fed to keep rates at zero.
Last year everyone thought gold was forming a bubble when it topped out and fell back into the $1000 range again. I admit, after a while, I started to think that might be the case, too. But gold has since “bubbled out” twice and shown its resilience for breaking past the $1200 mark. As I write, gold was last at $1205 an ounce.
I’m not trying to be the first to make the “right” call on gold or prove others wrong. My point is just that moves in gold can be a very interesting phenomenon and one shouldn’t underestimate the power of pressure on the gold price. I can’t say I’m a gold bug because I actually don’t even currently own any gold – but I have to say that the gold bugs’ analyses are probably underappreciated.
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If the Fed has another round of quantitative easing gold will take off and don’t forget about silver which is very undervalued right now. Jim Sincliar believes it’s going to $1450.00 by years end. This is taken off his website for anyone who owns gold(physical):
Contemplate what each of the following means to you one at a time. Do not try to do them all at once. You do not want to do this as a routine memory exercise as much as a meditation on why you have bought the insurance you have.
- Gold is a currency with no liabilities attached.
- Gold is competition to paper currency.
- Gold is not a commodity.
- Gold is a barometer of fear.
- Gold is a barometer of confidence in Government.
- Gold is insurance.
- Insurance is not something to trade.
- Gold is money when money fails.
- Hyperinflation is a currency event, not an economic event.
- Hyperinflation is a currency event described as a loss of confidence in the currency.
- Gold in your hand eliminates counter-party risk.
- Gold is the high ground when the global tsunami hits.
- Gold removes financial agents between you and your assets.
Be strong in your conviction and do not be bothered by the return of the Prechterites and top callers.
$1450 sounds reasonable considering the run-up it’s already had in one year (actually, in 10 months). I’d forgotten about the impact more QE might have. Since consumer spending isn’t back, and government spending has basically run out (24% of all stimulus projects are already done), where’s the next round of spending coming from?
i would like to know which indicators you use to predict increase and decrease in silver prices because of its volatility compared to gold. with etfs that suppose to be backed by the physical metal and many are not what bearing does this have on deflating the price of silver.
@Marvin Anderson:
Just remember that most of the ETF’s are leveraged to something like 100:1 so the price of silver(equity) could deflate if it blew up, but the physical demand would be so great that you would not be able to buy it because no one would want to sell their physical…so ultimately the price would rise.(and rise big time if you owned physical) if you owned the etf, it could go to $0.00.
I look at supply and demand, I can only see silver(physical) going up long term. Silver is a commodity that is a must for some industry and if there is a shortage at some point industrial users will result to panic buying. (thats the positive side of things). If there is no demand based off the economic worries than it becomes a monetary metal and with gold going up and well over 1300.00 now the average investor will come in running buying the poor man’s gold – SILVER.
Hope this helps…just stay long physical Silver(and Gold). What else can you buy today that was cheaper in 1980?
gold will top 1650 per troy in october 2011 and will level off at 1575 at years end. please do not comment, I do not want to hear any of your sh!t (:
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