Please read the referenced articles below with an open mind, and only then reach your own conclusions. [Yes, you are being challenged again to ‘think for yourself’ – and invest accordingly.] Words: 699
So says Ian R. Campbell (www.StockResearchPortal.com) in edited excerpts from his synopsis and review (a component of a subscription service but presented here with his kind permission for posting on www.munKNEE.com – Your Key to Making Money!) of an article* written by Andre Janse van Vuuren (www.miningmx.com) entitled Gold: ‘Well South of $1,000’
Campbell goes on to say, in part:
I have written a number of recent articles [see below] in which I presented contrarian views about gold as a challenge to you to ‘think for yourself’ and this is another such article.
The article reports that, in a speech at a conference in Johannesburg on April 11th, Paul Walker of GFMS Consultancy said:
- physical gold could trade well below U.S.$1,000 once ‘real’ (not inflation included) interest rates begin to “return to positive territory” but the current scenario might be sustained for the next six to twelve months, [Read this excellent article on the subject of interest rates and the price of gold: Low Real Interest Rates Say Gold Bull Still Has Legs! Here’s Why] and
- [the potential weaknesses would be dependant upon the] investor appetite to absorb the approximate 200 tonnes per month of production, in circumstances where Mr. Walker does not place much weight on Central Banks purchases to sustain demand.
The same article [and article** below] reports that, concurrently, Phillip Klapwijk, GFMS Head of Metal Analytics, thinks that:
- gold could drop lower from current levels over the next month or two, but a push toward $2,000 is definitely in the cards before the year is out…with a clear breach of that mark a likely event for the first half of next year. [Many articles have been written on where the future price of gold is going and two summary articles of note are: Gold: $3,000? $5,000? $10,000? These 153 Analysts Think So! and Update: 51 Analysts Now Maintain that Gold is Going to $5,500 – $6,500/ozt. in 2015!]
Clear drivers of this view are said to be:
- expected resumption of acute fears over Eurozone sovereign debt, with Spain being a new area of concern; and
- expected faltering of the U.S. recovery over the next few months that will force the U.S. Federal Reserve into taking “additional monetary policy measures” (read new quantitative easing measures).
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While Mr. Walker’s views should not be dismissed without thinking about them, it seems to me:
- the likelihood of ‘real’ interest rates being experienced in the next six – twelve months and beyond that in Europe and the U.S. is remote based on (to note but three things):
- ongoing Eurozone sovereign debt issues;
- the struggling UK economy, and
- the fragile recovery in the U.S., if indeed the U.S. is in ‘meaningful recovery’, and the U.S. Federal Reserve’s repeated statements of its intent to hold interest rates low for the foreseeable future; [Read: Nouriel Roubini: Ignore the Recent Favourable Macroeconomic Data – US Economy to Remain Weak – Here’s Why] and,
- curious that Mr. Walker and others at GFMS apparently see things so differently.
My Concluding Thoughts
I suggest you read the referenced articles with an open mind, and only then reach your own conclusions…
Ian R. Campbell, FCA, FCBV, is a recognized Canadian business valuation authority who shares his perspective about the economy, mining and the oil & gas industry on each trading day. Ian is the founder of Stock Research Portal, which provides stock market data, analysis and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges and can be contacted at firstname.lastname@example.org.
*http://www.miningmx.com/news/gold_and_silver/Gold-Walker-issues-price-warning.htm and **http://www.miningweekly.com/article/gold-push-towards-2-000oz-on-the-cards-before-year-end-klapwijk-2012-04-11 (To access these articles please copy the URL and paste it into your browser.)
Editor’s Note: The above article has been has edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.
Other “Think for Yourself” Articles:
It doesn’t take a rocket scientist to figure out that the technical picture for gold has been rapidly deteriorating…and a look at the longer term charts makes it clear that we have just witnessed a head and shoulders formation that has dramatically failed. The chip shot on the downside for gold here is $1,500 [maybe even] $1,450. Bring a double dip scare for the economy into the picture, which I expect to see this summer, and $1,100 is a possibility. If you get a real stock market crash in 2013, as many analysts are predicting, and you’ll get another chance to buy at $750. [That being said,] long term, I still like gold and expect it to hit the old inflation adjusted high of $2,300 during the next hard asset buying binge – but remember also that long term, we are all dead. Words: 900
Below is a synopsis of, and comments on, a very well balanced article on physical gold which is rather rare in this day and age. The article challenges everyone who owns gold, or is considering owning gold, to think for themselves, and then come to their own conclusions as to whether physical gold is, indeed, the ultimate inflation hedge that it is so often claimed to be. Words: 800
When forecasting, many economists and commentators fail to focus on the dramatic change in inter-country dependence in our ever more globalized world…and fail to let the actual markets influence their views. Below I critique two articles, rationalizing what they see for the price of gold for the balance of 2012. Words: 730
If you hold, or are considering holding, physical gold or silver or both, [it is imperative that you] read as many ‘balanced opinions’ as you possibly can with respect to ownership of each. [Here’s why]. Words: 337
Lately analyst after analyst (161 at last count) has been climbing on board the golden wagon with prognostications as to what the parabolic peak price for gold will eventually be. That being said, however, only 51 have been bold enough to include the year in which they think their peak price estimate will occur and they are listed below. Take a look at who is projecting what, by when and why. Words: 644
153 analysts maintain that gold could eventually reach a parabolic peak price of at least $3,000/ozt. before the bubble bursts of which 103 see gold reaching at least $5,000/ozt., 17 predict a parabolic peak price of as much as $10,000 per troy ounce and a further 13 are on record as saying gold could go even higher than that. Take a look here at who is projecting what, by when and why. Words: 844
Many agree that the United States’ massive budget deficits and global monetary inflation support the gold bull market. I don’t see this changing in the near future. Still, sentiment is not enough upon which to rely. I need a yardstick and, for me, that yardstick is U.S. real interest rates. [Let me explain why that is the case.] Words: 1600
Recent favourable macroeconomic data has suggested that the U.S. economy could be back on track but the recent uplift in the economy only hides more fundamental problems…[The truth of the matter is that] US economic growth will remain weak and below trend throughout 2012 as a result of net exports continuing to be a drag and the Fed being unable, in the face of political constraints, [to do enough, soon enough,] to help the economy significantly… [Let me explain more fully why that is going to be the case.] Words: 950