Wild, off-the-wall gold forecasts -- some of which have proved to be anything but wild or off the wall -- are a dime a dozen. Here's one that floored me; maybe it'll floor you, too.
First, the last thing I want to do is sound like a broken record after having written a very recent piece on the global buying rampage in gold. Nonetheless, I felt compelled to do a fast follow-up on the ongoing skyrocketing investment demand for the precious metal after hearing what has to vie for the mother of all gold forecasts.
No, it's not one of those flamboyant predictions that gold -- which topped $1,000 an ounce in early September and recently sprinted to a new all-time high of $1,153, is headed for the moon. Rather, it's an equally shocking assertion from a market-savvy veteran online investment adviser, Mark Leibovit, who not only sees the metal ballooning to new highs, but tells me "I doubt that we'll ever see $1,000 gold again."
Why not? Because of such catalysts, he explains, as the sinking dollar and the debasing of currencies by 24/7 money-printing around the globe (both of which point to higher inflation down the pike). Yet another catalyst for a higher gold price is a significant flip-flop by central banks, which have switched from gold sellers to gold buyers. As a result, Leibovit says, something above $1,000 an ounce is shaping up as a new floor for the metal.
What makes his forecast so wild is that even a number of gold buffs openly concede that the meteoric rise in the price of the metal--which is hitting new highs weekly and is up more than 100% in the past five years -- leaves the door open for a sizable correction that could knock gold down to the $850-$900 range. Some pros, in fact, contend that gold -- which pays no interest or dividends -- is now in a bubble stage.
Leibovit, editor of the VR Gold Letter in Sedona, Ariz., disagrees, contending we're in the early stages of a new commodities boom, both, metals and agricultural, because of the global infrastructure craze. "The world is booming, unlike the U.S., which is in a slump because of the idiotic bankers," he says, and he figures gold will be a major beneficiary of the commodities boom.
At some point, Leibovit sees hedge funds piling into gold big time, which, he believes, will create a speculative bubble and drive gold next year to $1,500 to $2,000 an ounce. On an inflation-adjusted basis, he feels gold should actually be selling at $2,300, a price that he expects will eventually be realized.
"Gold is in the catch-up process," he says. What's more, he views his projected price increases as a prelude to an even bigger eventual rise to $3,000 to $5,000 an ounce.
"The world." as Leibovit sees it, "is moving away from paper currencies," which means, he says, "the price of gold has nowhere to go but up."
What about the negatives? Other than periodic profit-taking, Leibovit doesn't see any significant near-term risks. He does note, though, that more gold supply is on the horizon because of the rising prices.
His favorite gold play is actual ownership of the physical metal itself, such as gold bars and gold coins, and he recommends their purchase through well known bullion dealers like Monex and Blanchard.
Many gold pros are quick to recommend buying the actual physical metal itself through the purchase of ETFs (exchange-traded funds) that actually hold stakes in gold. But Leibovit is not keen on this strategy, noting that in ETFs, you actually don't own gold itself; rather, you own a promise.
Meanwhile, in London, Harrod's Department store is selling gold bars and gold coins. With the metal racking up new highs almost every few days, some pros, among them veteran investment advisor and long time gold bull, Richard Russell, wonder how long it will be before gold hits the counters of U.S. department stores.
Pointing to a hefty short position in gold, Russell, editor of the Dow Theory Letters, thinks the gold buyers could overpower the gold shorts and drive them against the wall. If that happens, he says, "the shorts will panic and we'll see gold doing an imitation of the July 4th fireworks."
Let me know what you think. Write me at Dandordan@aol.com