Best of the Week
Most Popular
1.Trump Delirium Triggers Stock Market Brexit Upwards Crash Towards Dow 20,000! - Nadeem_Walayat
2.The Future Price Of Gold Will Drop Below $1000 In 2017 -InvestingHaven
3.May Never Get Another Opportunity to Buy Gold at this Level Again - Chris_Vermeulen
4.Delirium - The Real Reason Why Donald Trump Won the US Presidential Election - Nadeem_Walayat
5.Why Nate Silver / Fivethirtyeight is one of the Most Reliable Election Forecasting Indicator? - Nadeem_Walayat
6.Gold Price Forecast: Nasty Naughty November Gold Price Trend - I_M_Vronsky
7.Gold Mining Stocks Screaming Buy! Q3’16 Fundamentals - Zeal_LLC
8.Delirium of Trump Mania Win's Mr BrExit US Presidential Election 2016 - Nadeem_Walayat
9.The War On Cash Goes Nuclear In India, Australia and Across The World - Jeff_Berwick
10.Hidden Signs for Gold and Silver - P_Radomski_CFA
Last 7 days
The Rise of Anti-Establishment Italy - 7th Dec 16
The Rise of Anti-Establishment Italy - 7th Dec 16
Trump Likely to Drive Another Bump in Stock Market Buybacks — Here’s How to Hedge - 7th Dec 16
World War II and the Origins of American Unease - 7th Dec 16
Online CFD Trading for Traders on a Budget - 7th Dec 16
Silver Bullion Price Buying Opportunity for 2017? - 7th Dec 16
The Imminent Multi-Trillion Dollar Surge In Social Security & Medicare Costs - 7th Dec 16
Gold Bullion Price Buying Opportunity for 2017? - 6th Dec 16
Shariah Gold Standard Approved for $2 Trillion Islamic Finance Market - 6th Dec 16
THE Gold Play for 2017 - 6th Dec 16
Trump Sets The Stage For A Huge Gold Rally In 2017 - 6th Dec 16
BrExit Tsunami Claims Emperor Renzi's Scalp, Counting Down to End of the EU, Next? - 6th Dec 16
Failed EU - Means an Expanded Dictatorship - 6th Dec 16
Crude Oil Prices: "Random"? Hardly - 5th Dec 16
The Coming Stock Market Crash and WWIII - 5th Dec 16
This Past Week in Gold Market - 5th Dec 16
Stock Market Short-Term Correction Underway - 5th Dec 16
If Trump Doesn’t Do This, We Will Have the Great Depression 2.0 - 5th Dec 16
India’s Demonetization Could Be the First Cash Domino to Fall - 5th Dec 16
Our Future Economy, Jobs, Banking, And Governance - 5th Dec 16
Gold and Silver Bullion Buying Opportunity for 2017? - 4th Dec 16
First UK BrExit then Trump, Next BrExit Tsunami Wave to Hit Italy HARD Sunday! - 3rd Dec 16
The 10YR Yield and SPX Stocks Bull Markets - 3rd Dec 16
Gold And Silver – Do Not Expect Much Difference With Trump Compared To Obama - 3rd Dec 16
Gold, Currencies and Markets Critical 61.8% Retracements - 2nd Dec 16
Gold Junior Stocks Q3’16 Fundamentals - 2nd Dec 16
Adventures in Castro’s Cuba - 2nd Dec 16
We Are Putting Off the Inevitable - 2nd Dec 16
Macroeconomic Cycles & Demographics - A Fuse, An Explosive and The Igniting Catalyst - 2nd Dec 16
How Moving Averages Can Identify a Trade - 1st Dec 16
Silver Prices and Interest Rates - 1st Dec 16
America, is it Finally time for us to say Goodbye? - 1st Dec 16
Blockchain Technology – What Is It and How Will It Change Your Life? - 1st Dec 16
Burn the Flags, Can Trump Salvage The Sinking US Economic Ship? - 1st Dec 16
Will US Housing Real Estate Market Tank in 2017? - 1st Dec 16
Referendum Puts Italy's Government to the Test - 30th Nov 16
Why We Haven’t Seen Gold Price Rally after Trump Victory - 30th Nov 16
Breakdown and Slide in Crude Oil Price - 30th Nov 16
A 'Wicked Rally' in Gold Price Predicted - 30th Nov 16
Silver Market Sentiment Looks Golden - 30th Nov 16
Indian Demonetization Denotes Severe Stress in the Global Gold Market - 30th Nov 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

$10000 Gold

The Case for Higher Gold Prices

Commodities / Gold and Silver 2012 May 04, 2012 - 06:03 AM GMT

By: Money_Morning

Commodities

Best Financial Markets Analysis ArticleDiane Alter writes: Gold prices had gold bugs giddy in the fall of 2011. In September, the luminous yellow metal touched an intraday high of $1,920 a troy ounce, putting the precious metal up roughly 35% for the year.

At the time it seemed like investors, traders and even the guy at the corner store were all buying, hoarding, and lusting for gold.


But the stellar gains were short lived, and by the end of the year gold prices had fallen by nearly 20%.

Part of the striking decline in gold was due to the fact that the "smart" money that had once been amongst gold's biggest cheerleaders, sold it.

Some booked profits, some sold it to reflect gains in portfolios, others were forced to sell to meet margin requirements, and others wanted to start the New Year with a clean slate.

Gold Prices in 2012
Enter 2012, and gold prices enjoyed a lustrous January, rising some 10%, helped in particular by Chinese New Year celebrations.

Gold has since languished as investors became more willing to take on added risk, delving more into equities. While gold prices foundered, the Dow rose 8% in the first quarter, the S&P 500 gained 12%, and the Nasdaq enjoyed a nearly 19% gain.

And more recently, not even gold's best friend, Federal Reserve Chairman Ben Bernanke, offered up much help.

Following the commencement of the two-day FOMC meeting last week, gold experienced a volatile day, but managed to end virtually flat from the previous trading session. The Fed left interest rates steady and extinguished hopes for immediate further monetary loosening measures.

Without a promise of more quantitative easing, long gold holders headed for the exits.

Nonetheless, many sophisticated gold traders are poised to pounce on gold with every dip.

Among them is the storied and accomplished commodities investor Jim Rogers.

Best known for calling the commodities rally in 1999, Rogers recently said, "If there is a shock to the system, such as a eurozone country like Spain going bankrupt, then everything will go down, and I hope I am smart or alert enough to buy more gold at that point."

The renowned investor also added that if India, the world's largest bullion buyer, implemented another tax increase on gold imports, it would pave the way for a smart entry point for investors, since it would limit the country's input to the gold market. The Indian government hiked the tax level for gold bars, coins and platinum to 4% in March, up from 2% in January.

Meanwhile, Rogers is mildly bullish about economic conditions in the United States for 2012, noting that because we are in an election year, the government is pulling out all the stops to boost the U.S. economy for at least two years.

So, Rogers is positioning his portfolio by stocking up on commodities, including gold. He explains that if economies do recuperate and prosper, they are going to need more commodities.

Conversely, Rogers says that if growth wanes and a recession looms, he wants to have a stash of commodities because of the flood of money-printing that is bound to follow.

Either way, Rogers likes gold.

That is not to say that gold is bulletproof. In fact, Rogers says a gold price correction could happen sooner rather than later, and the downside is $1,200-$1,300 a troy ounce.

Investors may be wise to watch for and seize upon any sell-offs in gold.

The Power of Gold
Of course, there are myriad reasons to be enamored by the precious metal.

As the World Gold Council notes:

•Gold is one of the few financial assets that does not rely on an issuer's promise to pay.
•It offers investors insurance against extreme movements in the value of other asset classes.
•It provides a portfolio with diversification, adding protection against fluctuations in the value of one single asset or group of assets.
•It acts as a hedge against inflation because it retains its purchasing power.
•It is held as a hedge against currency fluctuations.
•The demand for gold has shown sustained growth in recent years and the supply/demand ratio has positioned the yellow metal for its most positive outlook in over a quarter century.And as more and more people become disenchanted with paper currency as a store of value, gold prices promise to rise.

So how high can gold prices climb in 2012?

According to commodities expert Peter Krauth, gold will reach $2,200/oz. in 2012. That's about 35% higher than gold's current level of about $1,635/oz.

"None of the fundamentals supporting gold prices have gone away," Krauth said. "Instead, they've only become even more entrenched."

Longer term, Krauth believes gold prices will eventually hit $5,000/oz in a "superspike."

And that could mean even sweeter returns for gold investors over the long haul.

[Editor's Note: Gold isn't the only way to profit in today's commodities bull market.

According to Krauth, soon virtually every substance vital to modern life will become enormously expensive and profitable for investors who know how to play it.

As he explains in his latest report, "today's scarcity and soaring costs could spur the biggest investment gains in history."

To read Krauth's latest free report click here.]

Source :http://moneymorning.com/2012/05/04/the-case-for-higher-gold-prices/

Money Morning/The Money Map Report

©2011 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife