New Price Targets Issued For Gold & SilverAugust 10 (King World...

New Price Targets Issued For Gold & Silver
August 10 (King World News) – James Turk: It’s time to update my gold and silver price targets, Eric. It’s hard to believe but it was only three weeks ago on KWN that I raised my target for Sep delivery silver from $22 to “the $30 area.” Silver reached $29.91 on Friday.

I expect that prices over $30 can be seen any day now given the speed at which silver is traveling, and it is traveling at high speed for two really good reasons...

First, silver is undervalued. What other commodity as important and useful as silver is trading 45% below the high price it reached when the dollar was inflating wildly 40 years ago in 1980?

Second, the flow of wealth moving out of the US dollar is picking up momentum. The reason is clear. The outlook for the dollar is poor because of artificially low interest rates and the Fed’s easy-money policies that are funding massive US government deficits.

But there is one big question in everyone’s mind at the moment, Eric. When will there be a price correction in silver?

Silver Bull Continues To Stampede
Because silver’s price advance has been spectacular, the first correction was easy to miss. It was July 28th, the day silver covered $3.65 of ground within a few hours. The correction then continued for a couple of more days, but there was no further price drop. Prices corrected by just moving sideways in a trading range, which does happen in bull markets. Sometimes a sideways correction is enough to take the steam out of an overbought market.

Silver is now in another correction. After September silver touched $29.91 on Friday, it dropped nearly $2.50. The slide was a combination of profit taking and shaking out over-leveraged traders, but the preliminary estimate shows open interest increased. That suggests the sellers were unloading into the open arms of new buyers looking to climb aboard this speeding locomotive. That is a bullish development in my view.

Of course markets can do anything, and we always need to be prepared for events that may appear to be a low probability. So silver could retrace back to lower levels. But maybe this current correction will be like the last one with prices simply trading in a range for a few days. Then again, maybe the correction is over. After all, silver jumped 75¢ in trading after Friday’s Comex close.

Gold’s Long Overdue Bull Market
Gold also climbed after Friday’s Comex close, jumping $20. My price target for gold has been “a new record high,” which is still a good target. We should be expecting new record highs to recur in the weeks and months ahead. The precious metals are in a long overdue major bull market.

As my colleague Alasdair Macleod told KWN, the London gold market is “running on vapor,” meaning that physical gold is in short supply. Conditions at present have the potential for a short squeeze in gold, much like what is happening in silver.

New Price Target For Gold
So my price target for gold is much, much higher. Near term, I’m focusing on 20% higher, so $2,400 before year end – and very possibly by September 30th if the scramble for physical gold continues.

New Price Target For Silver
As for silver, my target is based on the gold/silver ratio, which has dropped from 126 on March 18th to 73 on Friday, about a 40% decline. If it happened once, it can happen again – and I think another plunge in the ratio is very likely. So another 40% decline would put the gold/silver ratio at 44. That would also target a new record high of $55 for silver based on my $2,400 gold target.

For those of you that are accumulating physical gold and silver, do not try to get cute and time the markets. Instead, simply continue to dollar cost average by purchasing gold and silver at the same time each month or each quarter. This will help you by removing your emotions as these markets become even more volatile and continue to hit new all-time highs in their secular bull markets.