Why Many Analysts See Gold Going As High As $10,000

My first reaction when I read an article* on this site by Arnold Bock – articulating why gold would go to $10,000 – by 2012 no less – was amazement. Who in their right mind would suggest that gold would eventually reach $2,500, let alone $5,000 or even $10,000? www.munKNEE.com; By: Lorimer Wilson; Words: 2097
Well, I did some investigation and, believe it or not, Bock is in lofty company. Many respected individuals, such as David Rosenberg, Peter Schiff, Harry Schultz, Rob McEwen and many others, have come to the same conclusion. Below is a partial list of such individuals with sound reasons to substantiate their views.
1. Peter Schiff:
As President & Chief Global Strategist of Euro Pacific Capital, Schiff correctly called the current bear market before it began. As a result of his accurate forecasts on the U.S. stock market, economy, real estate, the mortgage meltdown, credit crunch, subprime debacle, commodities, gold and the dollar, he is becoming increasingly more renowned.
He recently was reported in Business Week as saying that “People are afraid of the debasement of all the currencies. What’s surprising is that gold is still as low as it is … Gold could reach $5,000 to $10,000 per ounce in the next 5 to 10 years.”
Source: http://www.thecapitalgoldgroup.com/2010/06/where-is-gold-headed-from-here.html
2. David Rosenberg:
Rosenberg, the former Merrill Lynch North American Economist and current Chief Economist and Strategist for Gluskin Sheff, an independent investment firm for high net worth individuals, believes that “$3000 an ounce on gold may yet prove to be a conservative forecast.”
He went on to say:
- “if the gold price to world GDP ratio were to ever scale up to the peak three decades ago, it would imply an ultimate peak for gold of $5,300 an ounce.
- if the relationship between gold and the M3 money measure where to revert to the 1990 high, then gold would move to $5,700 an ounce.
- if gold were merely put on the same footing as the CPI, and head back to the previous peaks in this ratio, it would suggest $2,300 as the peak in gold — only a double from here.
- if the gold price-M1 ratio was used then gold would go to $3,100 per ounce under the proviso that prior highs get re-established.”
Source http://www.thecapitalgoldgroup.com/2010/06/gold-is-increasingly-being-vie.html
3. Alf Field:
Alf Field has been called the “world’s best gold analyst.” He is well known for his many spot-on predictions in the precious metals market and these are some of his determinations regarding the future price of gold:
a) “In the 1970′s bull market, gold increased from a low of $35 to a peak of $850, a massive 24.3 times the low price. If the current bull market was to be of the same order, then one could project an ultimate peak of $6,221 (gold’s low price in the current cycle of $256 x 24.3).
b) Field outlined in an article back in August 2003 his conviction, which he referred to again in his concluding November 2008 article on the subject of Elliott Wave and the gold price, “that the world, and especially the USA, was heading for a major financial crisis that would be so powerful that it would overwhelm all other factors [which] I referred to as the ‘Big Kahuna’ crisis. I anticipated that the Big Kahuna would give rise to the risk of a systemic meltdown, which would result in the authorities ‘throwing money at problems’, bailing out all the banks and large corporations that got into trouble. This would lead to the [eventual] destruction of the currency…The consequence of the systemic meltdown would be a vast increase in newly created money which would result in a massive rise in the price of gold” culminating in a “Major FIVE…to $10,000” [which] “can really only be possible in a runaway inflationary environment, something which many thinking people are suggesting has become a possibility as a result of the actions taken during the recent crisis.”
[Indeed,] “the odds strongly favour an inflationary outcome. Given a strong will and the ability to create any amount of new money via the electronic money machine, it seems a foregone conclusion that runaway inflation will be the end result. If Mugabe could do it in Zimbabwe, there seems little doubt that Ben Bernanke and his associates in other countries will have no trouble in doing it too.”
Source: http://www.gold-speculator.com/alf-field/7413-elliot-wave-gold-update-23-a.html
4. Forextraders.com:
a) “As gold keeps breaking new records…the fundamental factors behind the trend remain clear:
- increased worries about the solidness of U.S. public finances
- the lack of any serious government plan to resolve long standing issues related to the future of the social security system
- eroding credibility of the U.S. motto about a strong dollar
- the general weakness in the fundamentals of the global economy”
[all of which make the] purchasing of gold…a store of value that thrives when uncertainty, insecurity, and fear rule the global economy. Furthermore, when we recall the never ending speculations about the U.S. dollar’s demise, it is only natural that the metal will find attention regardless of the price tag, until a bubble develops [but] we are apparently very far from that turning point.
Gold has some powerful dynamics behind its rise, and it doesn’t seem outlandish to imagine a target of $3000 – $4000 in the next 5 years, if, as anticipated, economic activity goes for a second dip once the impact of government stimulation and private speculation and bubble-building lose their dominant effects in the markets.”
b) the ten-year long correlation between gold and the Euro has broken down recently [and it is] “our expectation that gold will generate a super-bubble in the next 2-3 years, and perhaps longer, provided that policy accommodation remains in place even as investor confidence evaporates completely.”
5. Harry Schultz:
Harry Schultz’ International Harry Schultz Letter (a paid subscription investment service) has gold going up eventually to $6,000 saying “We (collectively) are poised at a heart-stopping moment in economic times. On the one extreme side, the world is on the edge of massive deflation and depression. At the other extreme is – hyperinflation. My view is that both these extremes are possible. Certainly deflation is, on balance, in play today and gaining ground as money supply is actually declining! Hyperinflation seems impossible when there is not much inflation in most economies. But … hyperinflation is a monetary event, not an economic one, and will happen on an overnight basis, not via a general uptrend in inflation data… As I write, gold is holding very near its high, as most stock markets are bungee jumping. This implies the unexpected hyper is pending, because if it were exclusively deflation ahead, gold action would be less buoyant.”
As such Schultz recommends that one put 40-50% in gold stocks and bullion; 10-15% in other commodities; 30-40% in government notes/bills/bonds; 8-10% in non-gold stocks and 0-5% in bear stock-market protection via inverse exchange-traded funds.