gold price

Jim Rickards Gold Forecast: ‘My Intermediate Target Is $10,000 An Ounce’

James (Jim) Rickards, an American lawyer, economist, investment banker, and best-selling author, was interviewed by Kitco News anchor Daniela Cambone at the Silver & Gold Summit in San Francisco this past week. Rickards, who penned the USA Today and Wall Street Journal business best-seller The New Case for Gold last year, offered up the following forecast for the price of an ounce of gold. From the interview:

CAMBONE: Last time you were on Jim you made a lot of headlines with your forecast. You don’t think $10,000 gold is out of the question. People raised a lot of eyebrows. But they don’t raise eyebrows with $50,000 Bitcoin calls now. Does that surprise you?
RICKARDS: Well, I’ll leave Bitcoin out of this. But here at the Silver & Gold show, and this morning in my presentation, I went through the $10,000 gold. It’s not a made-up number. I don’t do it to get headlines or attract attention. It’s actually the price that gold would have to be to avoid deflation. If you had a gold standard, or even if you were using gold as a reference in some kind of indirect gold standard, you have to get the price right given the quantity of gold. So the implied, non-deflationary price of gold is about $10,000 an ounce, conservatively. There are other, if you change M1 to M2 and increase the backing, you get to $40 or $50,000 an ounce. I don’t have to go there. My intermediate target is $10,000 an ounce.


“A ‘Major’ Gold Rally Is Coming, Thanks To The Fed- Jim Rickards”
(gold discussion starts at 3:11)
YouTube Video

Earlier this year Rickards explained how he arrived at that $10,000 price for an ounce of gold. From a piece he authored on the Daily Reckoning website back on March 7:

There is a solid mathematical basis for $10,000 gold. It’s actually the implied non deflationary price of gold under a gold standard.

The combined M1 money supply in the world is about 24 trillion dollars. That includes the United States, China, the Eurozone and Japan. Those four entities combine for over 70% of global GDP.

Now, the official gold in the world is about 33,000 tons. That’s not counting private gold, because private gold is not part of the money supply.

So if you wanted to restore a gold standard, how much gold do you need to back up the money supply? My estimate is about 40%.

Historically, central banks have run successful gold standards with less backing. In the 19th century, for example, the Bank of England only had about 20% gold backing. In most of the 20th century, the U.S. had 40% gold backing.

I use the higher number, 40%, because I think a higher number might be needed to restore confidence in event of a collapse. The point is, 40% is a debatable, but reasonable figure.

Many people say there’s not enough gold to support the money supply. That’s one of the objections to gold standard. But my answer is that’s nonsense. There’s always enough gold to support the money supply. It’s a question of price.

Now, if you back 40% of the $24 trillion of money supply with the amount of official gold, it implies a gold price around $9,000 an ounce. But I predict $10,000.

So how do I arrive at $10,000 an ounce?

That’s because I expect central banks to print a lot more money by the time this issue comes to a head. So, by the time the printing presses stop running around the world, that $9,000 number will likely be in the range of $10,000.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: A qualified professional should be consulted prior to making a financial decision based on material found in this weblog. If this recommended course of action is not pursued, then it must be understood that the decision is the reader’s and the reader’s alone. Christopher E. Hill, the creator/Editor of this blog, is not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented on the site.)

Source:

Rickards, James. “The Path to $10,000 Gold.” Daily Reckoning. 7 Mar. 2017. (https://dailyreckoning.com/path-10000-gold/). 24 Nov. 2017.

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David Rosenberg: Gold Heading To $3,000 An Ounce

I haven’t talked about David Rosenberg, Gluskin Sheff’s Chief Economist and Strategist too much on this blog. But back when I was running Boom2Bust.com, I would mention him on a regular basis. On February 9, 2011, I wrote:

For those of you not familiar with Mr. Rosenberg, back in 2007 he was one of the first economists to warn investors of the “Great Recession.” I started following Rosenberg when he was still Chief North American Economist at Bank of America-Merrill Lynch in New York. CNN Money said this of the economist last year:

Rosenberg, who left an eight-year career at Merrill Lynch to become chief economist at Gluskin Sheff last May, is one of Wall Street’s best-regarded financial experts. His on-the-ball predictions have landed him on Institutional Investors’ list of All-Star researchers for years.

Yep. Rosenberg was one of the original “crash prophets.”

And these days, he’s really bullish on gold.

Jonathan Burton posted the following on MarketWatch’s blog The Tell last night:

Forget the Dow. If you really want to make some money, buy gold, says David Rosenberg. Gold is heading to $3,000 an ounce, the chief economist & strategist at investment firm Gluskin Sheff + Associates said Tuesday in a speech at a CFA Institute of Chicago conference.

$3,000 an ounce. Significantly higher from where his old employers see the yellow metal going in the next couple years. Jan Harvey reported on the Reuters website yesterday:

Even Bank of America Merrill Lynch, which remains broadly positive on gold, cut its forecasts this week. While still expecting prices to rise strongly next year to an average of $1,838 an ounce, it sees prices turning lower in 2015.

“The importance of investors, coupled with the lack of investor buying, has led to concerns that non-commercial market participants in general have reassessed the rationale of holding gold in a portfolio,” the bank said, reducing its 2013 and 2014 forecasts and cutting its 2015 price view to $1,675 from $1,900.

Still, there’s a reason why Rosenberg was the only economist recognized for his accurate economic projections in Fortune Magazine’s “Best and Worst of Wall Street 2011” and was ranked most accurate forecaster for 2011 by MSNBC. Back in that February 2011 post of mine I called attention to what I called a “must-read” article by him in the Globe and Mail (Canada) in which he wrote:

The United States is in a radical money-easing environment, in which the Fed is keeping interest rates artificially low while pumping money into the economy. This type of policy breeds speculative rallies. It inevitably results in boom-bust cycles such as the ones we saw in 1999-2002, 2006-09 and today. This is no time for short memories.

At best, the Fed has managed to create an illusion of prosperity, but it won’t last. And that should surprise no one who has followed the Fed’s activities over the past couple of years.

“Keeping interest rates artificially low.” “Pumping money into the economy.” “Speculative rallies.”

Any of this sound familiar to readers? It should, as other more-visible “prophets” (Faber, Rogers, Schiff, to name a few) are warning about such events now in 2013.

I leave you with this from Rosenberg’s Globe and Mail piece:

This is no time for short memories.

You can read Burton’s entire Rosenberg gold price call post on The Tell here.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s note: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

Sources:

Harvey, Jan. “More banks peel away from bullish consensus on gold.” Reuters. 5 Mar. 2013. (http://www.reuters.com/article/2013/03/05/gold-forecasts-idUSL6N0BXJ1620130305). 6 Mar. 2013.

Rosenberg, David. “Fed’s illusion of prosperity bound to vanish.” Globe and Mail. 8 Feb. 2011. (http://www.theglobeandmail.com/globe-investor/feds-illusion-of-prosperity-bound-to-vanish/article1899546/). 6 Mar. 2013.

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India, China To Boost Gold Demand Even More?

As I write this Tuesday afternoon, the spot price of gold is just north of $1,660- somewhat higher from last week when a number of observers were claiming the gold bull market was either dead or on its last legs. While the precious metal saw some major price drops recently, it should be noted that Indian jewelers were on strike, and China wasn’t observed to be making any significant acquisitions of the yellow metal. These two nations are the world’s largest gold buyers.

Well, the strike in India is over, and it’s suspected the People’s Republic of China isn’t as uninterested in gold as it appears. From Allen Sykora (Kitco News) on the Forbes website today:

Physical demand for gold is expected to pick up again now that Indian jewelry shops have ended a strike, although it remains to be seen how strong this demand will be and whether the protests will resume next month, analysts said.

A majority of India’s jewelers closed their shops for roughly three weeks to protest a doubling of the import tax on gold from 2% to 4% and introduction of an excise tax of 1% on unbranded gold jewelry. Jewelers reopened late last week when Finance Minister Pranab Mukherjee reportedly offered assurances he would consider a rollback of the excise duty…

India, along with China, is one of the world’s two largest consumers of gold. The end of the strike comes at a key time, with the approach of India’s gift-giving Akshaya Tritiya festival on April 24.

(Editor’s note: Italics added for emphasis)

And from the Australian business news and commentary website Business Spectator today:

The Australian’s Robin Bromby reckons Zijin Mining Group’s bid Norton Gold Fields is just the beginning of a much larger gold-buying program in China, and that there’s more to it than simple mergers and acquisitions.

“A very reliable source close to several gold companies tells us Chinese interests are not only taking stakes in explorers and miners, they are also buying gold directly from producers and shipping it home. There is much talk in gold bug circles in the US that the recent purchase by the Bank of International Settlements of more than four tonnes of gold may have been wholly or in part on behalf of the People’s Bank of China. Our source is quite clear on one thing: the move on NGF is just the beginning. China wants more gold and it doesn’t want to pay full market price for it (as it doesn’t for any mineral) so it will be looking to pick up more Australian gold producers and add the yellow metal to its existing central bank gold pile. Not something the Perth Mint will be happy to hear.”

(Editor’s note: Italics added for emphasis)

Sounds like the PRC doesn’t want to advertise its gold buying program to the rest of the world than it needs to. Which is understandable, as gold prices could rise in anticipation of purchases.

I guess the Chinese haven’t heard about gold being just a “barbarous relic” yet.

(Editor’s note: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

Sources:

Sykora, Allen. “Physical Gold Demand Expected To Pick Up As Indian Festival Approaches, Jewelers Strike Ends.” Forbes. 10 Apr. 2012. (http://www.forbes.com/sites/kitconews/2012/04/10/physical-gold-demand-expected-to-pick-up-as-indian-festival-approaches-jewelers-strike-ends/). 10 Apr. 2012.

“THE DISTILLERY: Riling Rio.” Business Spectator. 10 Apr. 2012. (http://www.businessspectator.com.au/bs.nsf/Article/china-resources-australian-economy-asx-rio-tinto-i-pd20120410-T7S3T?OpenDocument). 10 Apr. 2012.

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Gold Bull Market On Its Last Legs?

How much do you know about gold? I’ve been following the precious metal ever since I was in grade school. I remember going to the local public library in the mid-to-late 1980s to read up about it in books and numismatic publications. Astounded that the price of an ounce of gold was around $450 by the time I was entering my first year of high school, I remember telling myself, “One of these days I’m going to own gold.”

Now, long-time gold watchers such as myself know that gold is subject to huge price swings. Gold investors liken it to being on a roller coaster ride- definitely not for the faint of heart. Conversely, traders love that aspect of it.

But these days, there seems to be no shortage of negative material being written about the precious metal in the mainstream media. Why all the hate? Is it because gold is the proverbial “canary in the coal mine,” telling us something is wrong with the nation’s financial health? Being an optimistic people, many Americans may take exception at such a revelation (one must look beneath the surface of the “recovery” to truly understand the dilemma we’re in). By extension, is it because many Americans are jealous of their compatriots who got into gold early on, when the price was still “cheap.” As I pointed out back on February 9, the percentage of adult Americans that own investment gold is probably still less than 10 percent. Perhaps it’s because gold threatens their livelihoods (those involved with paper assets, for example).

All I know is this. Even though the fundamentals in support of a continued bull market in gold remain, with each (inevitable) significant price drop in the yellow metal there is some MSM outlet out there screaming the bull is on its last legs- if it’s not dead already. Case in point, Associated Press business writers Matthew Craft and Bernard Condon wrote on the Chicago Sun-Times website Wednesday:

Is this the end of the gold rush? Price drops along with stocks

The price of gold, which has climbed for years like a blood pressure reading for anxious investors, plunged Wednesday to its lowest level in three months.

Gold fell almost $58 to $1,614 per ounce. It has declined 15 percent since September, when it hit a peak of $1,907. It had more than doubled since the financial crisis three years earlier.

“It’s difficult to forecast, but I think the gold bull market is over,” said Cetin Ciner, a professor of finance at the University of North Carolina-Wilmington. He likened the surge in gold to dot-com stocks before they collapsed.

(Editor’s note: Italics added for emphasis)

High gold price being equated to high blood pressure. Never heard that one. Very creative.

Now, Professor Ciner “thinks gold is in a ‘bubble,’” according to an Associated Press piece from August 24, 2011. Ah yes, the notorious gold “bubble.” Remember this from all the way back on December 23, 2010?

“A gold bubble may well be coming our way”
The Telegraph (UK), March 20, 2009

“Beware the gold bubble”
Fortune, October 6, 2009

“Gold Is The Ultimate Asset Bubble”
Forbes, March 12, 2010

“Investors warn about a gold bubble burst as metal continues rally”
The Guardian (UK), August 19, 2010

“Has The Gold Bubble Burst?”
-CNBC, December 19, 2010

This bubble sure has a lot of air. Which really is quite amazing, considering, once again, the percentage of adult Americans that own investment gold is probably still less than 10 percent.

Dot-com bubble, lots of people wanted in on tech stocks. Housing bubble, lots of wannabe Donald Trumps wanted in (would rather have been a Thomas Barrack myself). Gold “bubble,” probably less than 10 percent of American adults want in on the shiny yellow metal.

Not very “bubbly,” if you ask me.

I wonder if all those gold commercials seen on FOX News and some other TV channels aren’t screwing with people’s perception of actual gold demand out there on Main Street?

I’d guess yes.

But back to my December 2010 piece. I wrote:

As shown above, there are lots of headlines these days trumpeting the coming demise of gold. Just don’t tell Euro Pacific Capital’s Peter Schiff that. Having gained notoriety for predicting the financial crisis, Schiff dismissed the idea of a gold price bubble in his Schiff Report Video Blog this past Tuesday:

I’m reading a lot again as the year’s coming to an end about “the gold bubble,” “stay away from gold,” “oh, it’s a bubble that’s going to burst,” “the small investors are going to get killed.”

Again, the people that see gold bubbles missed the housing bubble, missed the stock market bubble.

This is not a bubble. Gold’s rise is real. It reflects a permanent diminishment in the value of the dollar. Gold is just measuring the value of our money. We’re all printing money, the Fed is creating dollars, the dollar is losing value, so the price of gold has to rise to reflect that.

It has nothing to do with a bubble.

You go back to the 1970s. The price of gold went from $35 an ounce at the beginning of the decade to 800 at the end. A twenty-three fold increase. Now, 800 clearly was overvalued. And it did collapse. Gold prices dropped from 800 back- they settled into a range between 3 and 500 for about the next 20 years. So let’s call the average price after gold hit 800 350. It did go above 500 briefly, it went below 300 briefly, but most of the time it was about 350. So if you bought gold at $35, even after the bubble burst, it was still 10X where the bull market started.

But where are we now? Gold is about 1,350. The bull market started at 250. If we have a repeat of the 1970s, this market will top out around 6,000- 5,700 to 6,000- then gold will eventually fall and settle back down at around 2,500 and ounce- which is still more than twice the current price. And I believe, that the economic fundamentals are so much worse for the U.S. economy, and we’re going to debase the U.S. dollar by a much larger amount than we did in the 1970s, that we can have an even more spectacular rise in the price of gold. And yes, there’s no doubt in my mind that eventually, the rise in the price of gold will attract speculative money, and it will eventually overshoot, and then we’ll have a substantial drop.

But as far as I’m concerned, we are nowhere near that point yet, and the fact that so many people are so worried about it, and warning individual investors to stay away, this is a big sign that you keep buying, and I take comfort in the fact that the people who were so clueless, are so sure about the one thing, and that’s that gold’s a bubble that is about to burst.

Let’s move on. Here’s Agustino Fontevecchia writing on the Forbes website Thursday afternoon:

Gold’s Decade-Long Bull Run Is Dead, Gartman Says

Bernanke delivered the fatal blow to gold’s ten year bull market, according to Dennis Gartman. Gold has been in bear territory since the summer of 2011, when it topped out above $1,900 an ounce, with the latest post-FOMC sell-off inflicting irreparable technical damage, he says

According to Gartman, gold’s latest price action confirms the trend line has clearly been broken, indicating we’ve been in a bear market for 12 months, since it peaked. In Thursday’s Gartman Letter, “in retrospect it does appear that gold has not been in a bull market but has indeed been in a bear market” since August 2011, when it peaked above $1,900.

“Since then,” he added “each new interim low has been lower and each new interim high has followed. How, we ask, had we missed that fact!”

(Editor’s note: Italics added for emphasis)

Is this the same Dennis Gartman who reportedly sold the last of his gold holdings back in December 2011? Nicholas Larkin wrote on the Bloomberg website on December 14, 2011:

Gold, in the 11th year of its longest winning streak in at least nine decades, is poised to enter a bear market, according to Dennis Gartman, who correctly predicted the slump in commodities in 2008.

The metal, which traded at $1,666.30 an ounce at 2:43 p.m. in London, may decline to as low as $1,475, the economist wrote today in his Suffolk, Virginia-based Gartman Letter. He sold the last of his gold yesterday. Bullion has already dropped 13 percent from the record $1,921.15 reached Sept. 6 and $1,475 would extend that to more than 20 percent, the common definition of a bear market.

“Since the early autumn here in the Northern Hemisphere gold has failed to make a new high,” Gartman wrote. “Each high has been progressively lower than the previous high, and now we’ve confirmation that the new interim low is lower than the previous low. We have the beginnings of a real bear market, and the death of a bull.”

(Editor’s note: Italics added for emphasis)

And, is this the same Dennis Gartman that was the focus of a January 5, 2012, piece on the Financial Post (Canada) website, in which John Shmuel wrote:

Investment letter publisher Dennis Gartman declared Thursday that he was wrong about his bearish call on gold last month.

Writing in his daily investment letter, Mr. Gartman said he was reversing his position on gold, and now views the precious metal as being in a bull market.

“Gold is chasing steadily higher; it is not correcting and we’ve not been let back in,” Mr. Gartman said.

Mr. Gartman sold much of his position in gold last month, with the intention of buying back some of it when gold prices corrected. He forecast that gold would retreat to US$1,475 an ounce — however, the precious metal is now in its strongest rally in 10 weeks, closing at US$1,620 an ounce Thursday.

“We sold gold rather properly several weeks ago; we failed miserably, however, to buy it back for although our intent was clear late last week as we said it was our intention soon to re-buy that which we had sold, we’ve failed to do so,” Mr. Gartman said.

(Editor’s note: Italics added for emphasis)

Shmuel added:

The new bullish outlook for gold follows a month where Mr. Gartman was the subject of some high-profile name calling from fellow investment letter writer, Peter Grandich.

Mr. Grandich called Mr. Gartman “one of the Three Stooges” of gold forecasting after the latter declared gold was in a bear market

(Editor’s note: Italics added for emphasis)

Ouch.

I leave you with this. From the man who called the beginning of the commodities rally that started back in 1999. Last month, Jim Rogers told GoldSilver Radio’s Leigh Greenberg (GoldSilver Radio is operated by our advertising partner, GoldSilver.com) the following in an interview:

I’m an avid… Well, let’s say, yes, I do own gold and silver. I own precious metals because I expect the precious metals bull market to last at least for several more years.

(Editor’s notes: Italics added for emphasis; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

Sources:

Condon, Bernard and Craft, Matthew. “Is this the end of the gold rush? Price drops along with stocks.” Chicago Sun-Times. 4 Apr. 2012. (http://www.suntimes.com/business/11720436-420/is-this-the-end-of-the-gold-rush-price-drops.html). 6. Apr. 2012.

“Plunge in gold prices could nick its safe-haven image.” Associated Press. 24 Aug. 2011. (http://www.oregonlive.com/business/index.ssf/2011/08/plunge_in_gold_prices_could_ni.html). 6 Apr. 2012.

Fontevecchia, Agustino. “Gold’s Decade-Long Bull Run Is Dead, Gartman Says.” Forbes. 5 Apr. 2012. (http://www.forbes.com/sites/afontevecchia/2012/04/05/the-death-of-golds-10-year-bull-run/). 6 Apr. 2012.

Larkin, Nicholas. “Death of Gold Bull Market Seen by Gartman.” Bloomberg. 13 Dec. 2011. (http://www.bloomberg.com/news/2011-12-13/death-of-gold-bull-market-seen-by-gartman.html). 6 Apr. 2012.

Shmuel, John. “Gartman admits he made a bad call on gold.” Financial Post. 5 Jan. 2012. (http://business.financialpost.com/2012/01/05/gartman-admits-he-made-a-blown-call-on-gold/). 6 Apr. 2012.

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What’s Behind Gold’s Drop In Price?

Gold is getting pummeled this morning. The spot price of gold is down significantly- to $1,618 an ounce as I write this. As the fundamentals for investing in the precious metal don’t seem to have changed, what might be behind this most recent drop? Polya Lesova and Tatyana Shumsky wrote on the Wall Street Journal website this morning:

“What we see today is a rather broad-based selloff in financial markets,” said Carsten Fritsch, an analyst at Commerzbank. “The trigger was yesterday’s Fed minutes which dashed hopes of (a third round of quantitative easing.)”

Minutes from the Federal Reserve on Tuesday signaled that central-bank officials were less interested in another round of large-scale purchase of bonds…

Gold is typically seen as a safe-haven investment, but lately it has acted as a more traditional commodity.

This behavior “suggests gold is still mainly driven by speculative elements, not by long-term investors,” said Commerzbank’s Mr. Fritsch.

Okay, so the Fed minutes and speculative activity are playing a part in falling gold prices. But Lesova and Shumsky identify even more potential culprits:

Traders said gold’s downward spiral was exacerbated by national holiday celebrations in China, which kept buyers there out of the market. China is the world’s second-largest consumer of gold, but market participants there have been on the sidelines since Monday. Chinese traders are due to return to the precious metal market Thursday.

Meanwhile, jewelry store owners in certain states in India are also on the sidelines as they continue to protest the government’s gold tax hikes. India’s gold imports fell by around two-third in March as a result of the protests.

A stronger dollar also weighed on gold prices.

Earlier this morning, the U.S. currency was trading at nearly a 3-week high against the Euro and Swiss franc, and a 9-day high against the British pound.

But going back to the U.S. central bank’s minutes dashing hopes for a third round of quantitative easing, I happened to spot the following on the International Business Times website late this morning. From the IBTimes Gold global gold portal:

The modest rebound in the markets coincided with the release of a note by Jan Hatzius, Goldman Sachs’ chief U.S. economist. Hatzius, who recently predicted that the Ben Bernanke-led central bank will launch QE3 by June of this year, reiterated his monetary policy forecast in spite of Tuesday’s Fed minutes.

Commenting on the latest developments, Hatzius acknowledged that “Minutes from the March 13 FOMC meeting showed that the committee did not discuss monetary easing options in detail, in contrast to our expectations… March FOMC minutes make easing at April meeting unlikely without substantial deterioration in the outlook.”

However, the Goldman Sachs economist went on to say that “Officials’ views on the (economic) outlook were only a little more upbeat than previously.” In summary, Hatzius asserted that “an announcement of additional asset purchases remains our baseline, with June the most likely timing at this point.”

(Editor’s note: Italics added for emphasis)

Stay tuned.

(Editor’s note: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

Sources:

Lesova, Polya and Shumsky, Tatyana. “Gold and Silver Slump.” Wall Street Journal. 4 Apr. 2012. (http://online.wsj.com/article/SB10001424052702303299604577323500203422134.html). 4 Apr. 2012.

Jturbin. “Gold Price Sinks Further, Hits 12-Week Low.” International Business Times. 4 Apr. 2012. (http://www.ibtimes.com/articles/323969/20120404/gold-price-sinks-further-hits-12-week-low.htm). 4 Apr. 2012.

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Gold Sell-Off Driven More By Profit-Taking Than Bernanke Testimony?

When I saw that gold suffered its largest one-day loss since November 2008 today, I was curious to find out what was behind the huge drop. After all, the fundamentals hadn’t changed, and the evidence shows the precious metal isn’t even close to being in a bubble. Here’s what Ansuya Harjani, Associate Producer of CNBC Asia, wrote tonight on the CNBC website:

Gold prices dropped 5 percent to below $1,690 an ounce on Wednesday, marking its biggest one-day drop in more than three years, after U.S. Federal Reserve Chairman Ben Bernanke dashed hopes of further monetary easing.

The reason for the drop? Harjani reported:

The heavy sell-off in gold during Wednesday’s U.S. session was driven by profit-taking, according to several strategists, who tell CNBC they expect a bounce back in the precious metal as investors use the fall as a buying opportunity.

The strategists who spoke to CNBC think investors locked-in gains on this last day of the month, which contributed significantly to gold falling in price.

CNBC Senior Editor Lori Spechler wrote earlier in the day that gold’s fall could be due to a combination of factors, including:

• Profit-taking, as Harjani suggested above
• Traders interpreting Federal Reserve Chairman Ben Bernanke’s testimony at a hearing of the House Financial Services Committee on Wednesday as meaning quantitative easing is off the table for now
• Bernanke’s warning that rising gas prices could lead to temporary inflationary pressure, and possibly higher interest rates, where “the cost of owning a non-interest bearing asset such as gold or silver will rise, too making it less appealing to own the asset,” says Spechler

Other contributing factors might include slow physical demand from emerging markets and the possibility that Iran will accept gold as payment for transactions, leading to more of the yellow metal being released onto the markets, according to analysts in Spechler’s piece.

As I type this late Wednesday evening, the yellow metal is rebounding in Asia.

Sources:

Harjani, Ansuya. “Is the Profit-Taking in Gold a Buying Opportunity?” CNBC. 29 Feb. 2012. (http://www.cnbc.com/id/46581315). 29 Feb 2012.

Spechler, Lori. “Bernanke Comments Trigger Selling in Silver and Gold.” CNBC. 29 Feb. 2012. (http://www.cnbc.com/id/46576020). 29 Feb. 2012.

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Jim Rogers Doesn’t Think Gold Will Reach $2,000 An Ounce This Year

Jim Rogers, the CEO and chairman of Rogers Holdings, recently spoke to Investment Week. And while the legendary investor owns gold, he doesn’t see it going above $2,000 an ounce this year. Dominique de Kevelioc de Bailleul wrote on the ETF Daily News website on February 11:

Speaking with Investment Week, Jim Rogers of Rogers Holdings said he doesn’t expect gold to surpass $2,000 in 2012, putting him on the other side of the boat of some well-known analysts.

“I do not think it will go to $2,000 this year, no,” said the 69-year-old American expatriate living in Singapore. “I own it and I am not planning on selling it. It will go over $2,000 one day, but not this year.”

No elaboration on Rogers’ latest take on gold was contained in the Investment Week article of Feb. 10.

Rogers, who predicted the commodities bull market that began in 1999, didn’t see gold hitting $2,000 in 2011 either. He told The Economic Times (India) back on September 26:

We have discussed before that gold has been up 10 years in a row, which is very unusual in any asset class. So if it is up this year or 11 years in a row, gold is overdue for a correction and it could have a nice substantial correction given that it has been so strong.

I have no idea what is going to happen this year. I doubt if it will go to $2000 an ounce in 2011, it is more likely to have a correction which will last for several weeks, several months. It has been very strong. If it goes down some more, I would buy more gold as I have told you many times.

(Editor’s note: Info added to “Crash Prophets” page)

Sources:

de Kevelioc de Bailleul, Dominique. “Jim Rogers Out Of Step With KWN Gold Bugs (GLD, IAU, SGOL, GDXJ, AGOL).” ETF Daily News. 11 Feb. 2012. (http://etfdailynews.com/2012/02/11/jim-rogers-out-of-step-with-kwn-gold-bugs-gld-iau-sgol-gdxj-agol/). 15 Feb. 2012.

“Gold price correction will last for several months; buy on dips: Jim Rogers.” The Economic Times. 26 Sep. 2011. (http://articles.economictimes.indiatimes.com/2011-09-26/news/30204713_1_base-metals-precious-metals-silver-and-gold). 15 Feb. 2012.

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Wednesday, February 15th, 2012 Commodities, Crash Prophets, Investing, Precious Metals No Comments
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