It's not as if you've been rooting for the White Sox. Or the tortured Red Sox. Gold has a better track record than both those long-suffering-but newly redeemed-ball teams.
Well, a little better.
But if you've been forecasting record gold since, say, July of 1999 (when it was a mere $252/ounce), take a breather anyway. You've earned it. True, gold hasn't fulfilled your most glorious predictions just yet. But by cracking $500, not only has the precious metal doubled since that woeful 1999, it's busted through some pretty major resistance.
And the first time it did that-break $500 an ounce-it took just a month for gold to go turbo and hit a record $850/ounce. Less than a month, actually.
So is that what's in store for us again? Will we see another breathtaking rise in gold in early 2006? Only time will tell. But to hear many gold analysts tell it, the precious metal is now poised to ascend those heights once again.
Here are a few predictions:
World's Biggest Gold Producer Sees $1,000 Gold
Okay, so it might not surprise you to hear unbridled optimism from the largest gold producer. But Newmont Mining Corp. hasn't always been so forthcoming. Now, though, the giant doesn't seem to mind making the headlines. Newmont's president just said gold "may rise to more than $1,000 an ounce in the next five to seven years as demand growth driven by Asia outstrips global supply."
What's more, Pierre Lassonde, Newmont's President, was recently quoted as saying the gold market "is hot and it is going to get hotter, By early next year you are going to see $525 and down the road even a lot higher than that."
That's if nothing else happens to raise the temperature on this already hot market. Like inflation, for example. Newmont believes rising prices will be making goldbugs out of many traditional investors. "Everybody thinks inflation is going to stay at 2 percent, I don't believe it,'' Lassonde commented. "There has been way too much money printing in the world for that to happen."
Another factor Lassonde cites? It's one he should know about: Worldwide gold production last year had the largest decline in 39 years. And the decline should continue "for at least another couple of years simply because the industry didn't put money back into the ground when the gold price was very low."
Noted gold analyst John Embry said this about Newmont's prediction: "I thought one of the better prognostications I've seen recently is where Pierre Lassonde came out and said he thought gold would be trading north of $1,000 in the next five to seven years. The only thing I would say is that he's probably conservative."
Meanwhile Jim Sinclair thinks Lassonde's $1,000 price should be more like $1,650.
Bite-Sized Predictions of Red Hot Gold
Not every gold prediction makes the headlines. That doesn't make them any less important.
Noted technical gold analyst at Cycle Trends, Dr. Issy Bacher believes that after breaking $500, gold is "going to $700."
"If you go back in history gold has had two shots at $500. This is the third, and while it will pull back, it is going to continue rising."
John Hathaway, portfolio manager of Tocqueville Gold Fund made this interesting observation in November's Barron's: "If you took one-tenth of one percent of global financial assets and stuck them in gold, you would wind up with a couple of years of mine supply. It is a trade you can't do. But it still gets back to the question as to why people would get more interested in gold, and it's not all based on bearishness. India is getting more prosperous, and Indians like gold. China is getting more prosperous, and the Chinese like gold. More disposable income in Asia definitely helps gold."
GoldMoney's James Turk observed: "Once C$572 has fallen (It has now), gold will have made significant breakouts against all the world's major currencies. What's even more important, these breakouts have been launched from huge bases of accumulation within long-term consolidation patterns. This fact means that there is enough support under gold for it to climb higher for many more years."
"The smart money is realizing that there are some tough times ahead for the dollar in 2006 and more importantly, by hiding the money supply and not reporting M3, the total quantity of dollars in circulation, the Federal Reserve is not facing that reality."
"Even Warren Buffett is buying gold because he sees the dollar as weak."
Clément Gignac, Chief Economist and Strategist at National Bank Financial, sees bullion at $600 "the next 12 to 15 months." And that's only an "intermediate target." If, as he thinks it will, OPEC starts quoting the price of oil in a basket of currencies rather than just the dollar, bullion will be heading higher.
Then there's FatProfits. The independent gold advisor said this: "The fact that gold is now rising in value against other currencies is very positive in that we believe the bull market is moving into a new phase."
"Our confidence in gold is based on the yellow metal's limited supply against the virtually unlimited supply of the paper currencies it is valued against."
"Ultimately we believe that the gold price will rise north of US$850/ounce. We therefore continue to favour an overweight position in gold and gold stocks as part of a diversified portfolio."
"The price of gold is set to rocket," notes gold analyst Dr. David Davis in a report entitled "A Trilogy of Gold." He predicts gold will reach $1200 an ounce by the end of 2015. Along the way, gold will hit $700 an ounce by 2008, $750 a year later, and $800 an ounce in 2010.
He also thinks supply is falling way behind demand-something masked by central banks sales. When that practice ultimately runs its course, the price of gold will really soar.
Top financial firm, UBS, raised its 2006 forecast for gold to $520. "Gold's fundamentals also look stronger than previously expected, as supply and demand fundamentals and investment demand all appear stronger than previously anticipated," UBS said (as reported by Australasian Investment Review).
Others share that view. "Gold could hit $525/oz by the year-end as speculators, padded with wads of cash, pile into the metal driving the price to levels not seen since February 1983, analysts have said." That was reported by miningmx.com who also wrote: "'Funds are now boots and all in the gold market,' said John Clemmow at Investec, explaining there had been a churn of money in the oil and then base metals markets, which was now pouring into gold. We expect $525 in the first quarter of next year…"
"Middle East nations are getting more petro-dollars as (oil) prices rise, and they're not putting it back into paper assets," said Charles de Vaulx, manager of the First Eagle Gold Fund. "They're trying to protect the value of their profits-just like in the 1970s-so they're buying gold."
The price of gold may rise to $725 an ounce by 2010 as surging economic growth turns China into the world's biggest jewelry consumer, said Graham Birch, who manages a Merrill Lynch & Co fund that has grown fivefold since 2000.
"The Chinese are getting richer, and have very high savings rates," notes Birch. "As they earn more money, they will spend more on things like jewelry. The question is, where is all that gold going to come from?"
Even So, Contrarians Rest Assured
All these upbeat gold forecasts are enough to make the average contrarian squirm. No worries-$500 gold hasn't set off any sirens yet. If the investment world were a herd of cattle, it would still be quietly grazing instead of stampeding.
According to (Doug) Casey Research: "…it was interesting to observe at the SF Gold Show earlier this week that, despite expectations to the contrary, the retail investor crowd was both small and largely unexcited. While certainly not the morgue-like affair that these shows can be during hard slumps, it was nonetheless lacking the crowds and the buzz that are highlights of frothy markets.
Doug and I were not alone in noticing the phenomena, as several of the smarter people we came into contact with also made note of same…to a person then smiling and saying, 'Isn't it great!'"
It's great because sharper investors can take still advantage of the gold market before the herd moves in. Which is always an exciting-and all-to-rare-profit opportunity.
Kevin DeMeritt www.goldcentral.com December 7, 2005
