Some forecasts say gold will reach as high as 5,000 dollars per ounce (yes, you read that right) while others feel it will dramatically retreat. Why the wide range of gold price forecasts?
First we have the group that feels the prices will drop. What is the reason for this prediction? As the economy improves, the dollar will strengthen. In time confidence will return to the local currency and people will begin to de-hedge themselves from gold. Consider the drop in gold in 1980-81 where prices fell in half. If the same happened in 2011 or 2012 this would mean a price retreat to 500 ? 600 dollars per ounce.
Next we have the group that still feels gold is undervalued. Market volatility has only been exacerbated by globalization; just look how the problems in Greece affected the entire European Union! Also, if you adjust for inflationary levels, gold would need to be around $2,200 per ounce just to be on par with 1980 highs. And if you factor in other criteria such as economic output? well they have the gold price forecast for 2011 or later at a whopping $5,000 per ounce.
These are the varying forecasts from the ?experts?. What do you think the price of gold will be in 2011? I?d like to hear from you.
