Diggers and DrillersFriday, 21st of May 2010By Dr Alex Cowie...

Diggers and Drillers
Friday, 21st of May 2010
By Dr Alex Cowie

Even though we have seen a pullback this week, gold is still in strong uptrend and the fundamentals are firmly in favour of it going much higher from here. But just how high could it get? Goldman Sachs has just increased the upper range of its forecast band for the rest of this year from US$1200 to US$1300. Blackstone Advisory Partner's Vice Chairman, Byron Wien, is expecting more like $1500.

James Turk, the founder of Gold Money, told investors at the 2010 World Mining Investment Conference in London this week that he is expecting gold to hit US$2000 by the end of this year, and silver to hit US$30. Turk's five year forecast is what stood out for me though. He is expecting gold to get closer to US$8,000 by 2015.

When looking at predictions like this it helps to have some historical context. It is useful to recall that Gordon Brown sold 60% of the UK's massive gold stash ten years ago (during his tenure as the UK's finance minister) for an average price of just US$275/oz! The price has increased 4.3 times since then. Brown's disastrous move will forever be suitably referred to as 'The Brown Bottom'. He clearly thought it was expensive at the time, just as we think it is expensive today. In a few years, today's prices will most likely look like a bargain.