Sunday , 19 November 2017


Gold Will Drop to $1390 By Year-end & $1000 by 2013! Here's Why

 

A review of the gold price written by Robin Bew, chief economist at HSBC Bank, proposes that the gold price is in danger of entering bubble territory and predicts a sharp correction by year-end to $1,000 per troy ounce by 2013. [Let’s examine Bew’s views more closely.] Words: 725

So says Stuart Burns (www.metalminer.com)  in edited excerpts from an article*  which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has further edited ([  ]), abridged (…) and reformatted below  for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement. 

Burns goes on to say, in part:

The bank states there is nothing special about the nature of gold that makes it an ideal safe-haven asset because, were it not for its widely perceived role as just that, gold would behave like most commodities and rise in value during good economic times when demand for its industrial uses increases. Of course, gold has limited industrial uses and, if that were the only source of demand, the price would behave exactly as he suggests. The problem, [however,] is the quasi-financial role that gold has — not quite a currency, but treated as if it were – which imparts it with a special status. Like all currencies, though, it can rise or fall depending on circumstances. Upon accepting that the world has somewhat arbitrarily assigned gold this role, we must review a number of factors that support gold’s price prior to predicting how these may develop in the year ahead, [namely,].

  1. Gold’s safe-haven status: As Bew points out; since Lehman Brothers collapsed on Sept. 15, 2008, the price of gold has more than doubled. Demand from investors rose by 73% from 2007 to 2009 and another 24% in 2010, along with demand for other safe-haven assets like US treasuries and the Swiss franc. The yield on all such government debt – US, German, Japanese — has been historically low for much of the last three years with the exception of early 2011, when the community went risk-on and moved out of safe havens and into commodities and other riskier assets. Recently, though, sovereign debt has been very much back in the news and gold has benefited from its safe haven status as the euro has seemed on the point of collapse and the U.S. government seems unable to reach agreement on budget cuts.
  2. The fear of inflation: Indeed, in 2009-10 many were attracted to gold as a hedge against the potential for rising inflation as the global economies bounced back in an extremely low-interest and loose monetary environment. HSBC… [however,] …does not see any significant risk of a rise in inflation in the early stages of what will be a weak and prolonged recovery phase. They are expecting a gradual US recovery starting later this year and observe that Japan is already returning to some sense of normality after the natural disasters early this year.

As interest rates rise, the attractions of financing investments in gold will be reduced compared to other asset classes. As a result, the bank expects the price of gold to average $1,390/troy ounce in the fourth quarter of 2011 and fall to $1,000/troy ounce by mid-2013… [providing] the recovery occurs as expected and inflation remains subdued…

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As such, some may question if gold at $1600/oz really represents such great value, or if they would be better off taking profits while they can.

*http://agmetalminer.com/2011/07/28/gold-asset-or-bubble/

  1. The Future Price of Gold and the 2% Factor  http://www.munknee.com/2011/06/the-future-price-of-gold-and-the-2-factor/
  2. Update: These 90 Analysts Believe Gold Will Go to $5,000/ozt. – or More!   http://www.munknee.com/2011/06/update-these-90-analysts-believe-gold-will-go-to-5000ozt-or-more/
  3. All This Gold Bullion Bull Market Hype is Just That – Bull….!  http://www.munknee.com/2011/07/all-this-gold-bullion-bull-market-hype-is-just-that-bull/
  4. Gold is Not an Investment – Gold is Money – and Here’s Why  http://www.munknee.com/2011/06/gold-is-not-an-investment-gold-is-money-and-heres-why/
  5. Richard Russell: Get Prepared – A Gold Tsunami is Coming  http://www.munknee.com/2011/05/richard-russell-get-prepared-a-gold-tsunami-is-coming/
  6. Gold to Repeat?  http://www.munknee.com/2011/07/gold-to-repeat/

Editor’s Note:

  • The above article consists of reformatted edited excerpts from the original for the sake of brevity, clarity and to ensure a fast and easy read. The author’s views and conclusions are unaltered.
  • Permission to reprint in whole or in part is gladly granted, provided full credit is given as per paragraph 2 above.

13 comments

  1. ..”Gold to fall to $1,000/troy ounce by mid-2013… [providing] the recovery occurs as expected.”

    There it is!! The qualifying statement… we will see gold at $1000 next year “IF” the economy “recovers”.

    I agree 100% with that statement… I also believe we will see a huge rise in obesity if it starts raining donuts!

  2. The author makes two fatal flaws: 1.) believing that interest rates will rise in the next two years, just after Ben Bernake, Federal Reserve Chairman, has said he will keep interest rates in the US near zero for the next two years, and 2.) that historically, gold has always fallen when interest rates rise. Both assumptions are false, see above for rebuttals on rising interest rates being bad for gold. Both counter-arguments are now public knowledge. Stuart Burns is promoting wishful thinking.

  3. An analyst who works for the banking industry that can’t even control their own rogue traders causing USD 2 billion losses in the cubicle down the hall has little credibility over his estimates on gold futures UNLESS I hear that his bank,the HSBC (Home of Scotland’s Banking Clerks) is selling its own gold holdings at today’s market price well above the $ 1,390 and $ 1,000 levels that he predicts.

  4. HSBC GOT A GOOD ANALYST AND RESEARCHER!!!! THIS IS TIME TO SELL THEIR RESERVE AND WHEN IT COMES TO 1300 BUY AND MAKE PROFIT!!! NO ONE KNOW ABOUT THE FUTURE MAN… EXCEPT GOD. MAY B GOLD WILL PASS 2000 OR DOWN 1000. WHO KNOWS?

  5. I hope gold drops to $1300 ounce. Then I can finally afford to own it! What about silver? Will it drop too at $7 ounce? I’ll buy up that too!

  6. gold is a store of value deflation or inflation….. if eveythings fine gold doesn’t do much,,,

  7. So, er, what about the 2 year zero interest rate just announced by the US Govt?

  8. HAHAAHHA oh my lord hold on HAHAAHAHA , whoooo good one dumb ass. Gold will fall as interest rates rise, uh huh ya, realy so when rates went up in 1978-1981 and gold went up at the same time, what was that? seriously where do these idiots come from….
    here a simple link see 1977 – 1981 5% to 14% gold went from what price to what price ? ya exactly … HSBC IDIOT.
    http://www.bankofengland.co.uk/mfsd/iadb/Repo.asp

  9. Haha! Excellent!
    So, I guess HSBC will be selling all it’s gold holdings and taking profit since the gold they hold will be dropping in price.
    Or . . . is that what they want everyone else to do so they can buy more for when it skyrockets?

    BS article! Buy physical and hold!

  10. Only reasonable reason he wrote this is because HSBC must have gigantic short positions need to be covered .

  11. So from reading this dribble…..

    Gold prices will fall as long as conditions are right for a price fall.Read the qualifiers near the end. This article is about as good as “The stock market will rise if the economy booms”
    Gee I hope his bank is the first to the wall when the revolution comes !!

    I love articles like this that ignore the huge sovereign debt hanging over the US and Europe, preferring to go with a “business as usual” line. It would be great to see these anal ysts accurately quantify a model showing how the US can realistically manage and eventually reduce it’s debt.
    Rising interest rates in the US ? What a joke ! It will all come apart before that happens.

  12. Oh my god! The contrarian of contrarian! How is that different from a common idiot from any street who has very little idea about monetary policy, why central banks buy gold rather than oil, and think inflation is all because of greedy merchants?

    The chief economist @ HSBC should be called the chief propagandist.

    Keep trying Robin Bew, this kind of logic can only persuade the ignorant ones, who never thought of buying gold in the first place. In summary, you are wasting your time.

  13. Is this a joke or what? The dollar is the bubble. Gold has been money for hundreds and hundreds of years.