Roger Wiegand: $2,960 Gold on the Horizon?

Interviewed by Karen Roche, 11/27/2009

Manipulation and money that's been on the sidelines are driving the market, according to TraderTracks editor Roger Wiegand in this exclusive interview with The Gold Report. He sees the makings of some "pretty exciting" action on the precious metals front, forecasting that gold could go beyond $2,960, and with the next big drop in the stock market, the gold and silver shares could really depart from the rest of the mainstream market, especially with the dollar being so weak. He likes companies that have good projects and strong partners, and cash in the bank.

The Gold Report: Roger, when we last spoke, at the end of August, you expected the stock market to have a pretty good fall after Labor Day. So, the market didn't collapse. . .what's your view on why it keeps appreciating?

Roger Wiegand: Well, part of it has to do with manipulation and part of it has to do with an awful lot of money that has been on the sidelines. A couple of months ago I heard there was around $8.5 trillion in cash that was not invested. I couldn't believe it. A lot of the money is starting to come back because investors are persuaded things are going to really pick up. Typically, what happens in the cycles is November 1st is the time to buy, after the September-October event sell-off is over. And, if you buy on November 1st forward, you usually do pretty well. This year it was delayed a little bit, and some of those charts look a little bit sloppy and choppy, and that's what got everybody confused, including me. As of November 24, 2009, the news is reporting smaller investors are running to the bear funds for security. If the correction is now imminent, it is off-cycle and late by at least three to four weeks.

TGR: Are you saying that you're expecting the markets to go up now that it's late November?

RW: We could go either way. I really believe that. We've got some interesting charts. There's the S&P chart, which has a double top on it right now, indicative of a selling point, obviously. I don't think there's going to be that much of a selling event. I think it's going to stay propped-up. Last week we saw a gravitational pull from the smaller cap stocks into the larger ones. Usually, when they go into the S&P 100 and they get out of the trading 500, it's because they're looking for security and safety, and they're looking to buy those consumer cyclical stocks, like household goods and toothpaste. There's a heavy load in that regard right now in the market, but I think they're going to get out—the people in the funds are going to get their bonuses, and they're going to get out of town with some pretty big money. But I don't think there's going to be very much selling right now. I really don't. The selling is coming but it is delayed until the funds exit and close the books for bonuses at year end next week.

A big part of this has to do with inflation, too. I know a lot of people say, "Well, there's no inflation now; it's all deflation." We disagree; we say that the inflation is now 7% and rising more quickly. Unemployment is a lot higher than people are discussing, and others are saying, "Well, this is a jobless recovery." Well, it may be a jobless situation, but it's certainly no recovery. What's happened here is a lot of corporations have laid-off so many people and run down their inventory so much that their overhead was cut back tremendously and they're showing profits, at least where we are right now. And those profits are going to be a one-off deal, I think. They're going to last for maybe a few months but come spring again, we're back to the same old problems. We're overloaded on debt. The bond market in Japan is looking absolutely horrifying right now; it's really scary. The government is selling bonds to pay pensioners and I don't think they've ever been in that position before. The amount of paper that is out there in Japan relative to GDP and the currency is way beyond where it is in the U.S. And I thought ours was bad!

So, in all likelihood, something is going to snap here pretty soon; it's got to. But it's confusing a lot of people because several good reports continue to be reported.

TGR: If you go back a year ago, everyone was looking at the balance sheets of the gold juniors, looking for those who weren't overloaded with debt who could survive the downturn in the capital markets. And so we've had a shake-out, and we're back to having free markets determine and who's going to make it...

RW: Absolutely. I think your example with the gold juniors is perfect. A lot of the ones who shouldn't have been in the business anyway are shaken out and gone because they didn't have capital; they didn't have the proper reserves; they didn't have any good partnerships. A lot of those projected mines were located in spots where they shouldn't have been politically. So, what have we got now? I don't know how many there were—I heard numbers like there were 5,000 of them (I don't think there were that many), and I hear now that there's something like 1,500. I have watched the charts and trading activity of these juniors that we like and those we dislike. We've thrown out the dislikes; we've made money on some like Canplats Resources Corp. (TSX.V:CPQ) now because Goldcorp (TSX:G) (NYSE:GG) bought them. The stockholders there obviously did very well, but there's more out there like Canplats. Timmins Gold Corp. (TSX.V:TMM) is another good one; I think Bravo Venture Group (TSX.V:BVG) is going to be a candidate for a buy-out on part of it.

Miranda Gold Corp. (TSX.V:MAD) is in the same position. They've been slowly and carefully building it up and shepherding their capital, and as a result, they've got some cash, they've got good projects, and they've got strong partners. And the deeper we get into the gold rally, which is going to last a long time, with companies like that, bits and pieces if not all of the company are going to get bought out. And, the people who hold the shares going to be very happy.

The experience we've been through is going to help us with what's coming next. The thing that's really interesting is that a lot of these stock buyers who focus on the juniors are not really educated in the industry — they don't understand, especially in America, as they do in Canada — how much further we've got to go on this thing. I just wrote in my letter this morning that some of the people that are involved in silver are thinking that because we are up to $22 and fell back to $9 that that's the end of the game. I think if you look at where we are in gold and silver right now we're basically on page two of a ten-page story. I believe that's how much longer we've got to go.

TGR: You've previously mentioned all currencies are devaluing almost simultaneously. Other than currency devaluation, what's driving the price of gold and silver?

RW: Well, a lot of it is fear; gold is now basically considered to be money in many of the foreign countries, partially in the U.S., more overseas. I think a perfect example is Vietnam. It looked like they were going to have some things that would work out in their economy, and unfortunately for them, a lot of it's coming apart. And they know from experience that if they can get into gold and hang on, they're going to be a lot better off.

And, China is the number-two gold producer now, we've been told. They're not selling any and not only that, they're buying it. Further, they're encouraging gold sales to consumers. And Japan has been doing the same thing. The supply of gold is not going to be able to meet what people are after here, and that's the reason for this breakout we're looking at right now. We felt gold shares would separate from the regular stock market. I saw early glimmers of that this fall, a little bit of that in late summer. And now I am more convinced than ever that with the next big drop in the stock market, the gold and silver shares could really depart from the rest of the mainstream market, especially with the dollar being so weak.

TGR: You've said that you see a lot of money moving from the smaller cap stocks to the larger cap stocks. Is the smart money moving to the seniors in the gold equity plays?

RW: Well, two things happen when you get into a market where the gold really starts to take off. Before, we were in a long, slow climb from $200 up to $850 — that was one marker. And then we got up to a $1,000 and hung around there for quite awhile, and it looked like it was going to sell off, and did, and then came right back. But we are now in the next price range, which is beyond $1,000, and Mark Faber of The Gloom and Doom Report, said this morning, "If gold will stay above $1,000, it's never going under $1,000 again." And I agree with him; I really don't think it's going to. Next, as of November 24, December gold futures are trading at $1,165 and have enough cycle room to reach $1,200.

Again, getting back to the senior versus junior, keep in mind when these markets get so crazy and convoluted like they are there's so much money looking for a place to go, that when a sector like gold takes off, where does the money go? It's going to go to NYSE gold companies, and who are those? Goldcorp, Newmont Mining Corp. (NYSE:NEM), Barrick Gold Corp. (NYSE:ABX), and Hecla Mining Company (NYSE:HL), and you've got some foreign ones; you've got Newcrest Mining Ltd. (NYSE:NCMGY) from Australia; and there's some in Africa. I don't like anything in Africa except the gold royalty companies.

TGR: So, as an investor, are you through shifting your funds to the seniors or are you still investing in the juniors?

RW: I don't trade shares personally; I trade the futures because they're faster and that's the business I started in. That's my preference — futures and commodity trading. I can't buy a stock and then go promote it. That's not fair. So, it's easier for me if I don't buy the stocks for me, but there's a lot of people who read our newsletter and that's all they do. They prefer shares, and they've made a lot of money on it.

TGR: Can you talk about some of the stocks in your newsletter?

RW: Sure. Clifton Star Resources (TSX.V:CFO) is one we've been talking about; it got some new financing with a partner. It looks like they've got $70 million in financing over a period of time from the new partner. And, it's an old gold mine in Quebec. I just love Quebec because they treat the miners fairly; they bend over backwards; they've got railroads; they're got grids; they've got water; they've got labor force. They've got old proven mines. With Clifton Star they started up on a property where they had an old mine. They had waste rock, and there was un-reclaimed gold in that waste rock. But with advanced geology the way it is right now and the technical ability and the sophistication they've got they can pull it out. They've got some bonanza grades in part of it. It's looking to be shaping-up to be a really good opportunity.

TGR: Anything else you are recommending?

RW: Hecla Mining Company . In early 2008 Hecla bought the Greens Creek mine in Alaska from Rio Tinto (RTP) and paid them $750 million, which is a lot of money for half a mine, but considering that they've been there as 50-50 partners for 20 years, they know what they've got. That's one of the things that emptied the treasury at Hecla, but these people have things squared away now, and Hecla is back on its feet, and moving nicely. I look for Hecla stock to rise from $5 to $8. And after that, once we get past $8 or $9 where there's a resistance number, you're looking at $12 or $13, and once we are past $13, we're going to be in new territory ahead and we're looking at $15 or $20. Hecla remains one of my better recommendations too; one that I really like.

I want to go back and make some comments on two companies I mentioned earlier. Timmins has a really interesting project in Mexico. Timmins was put together by a man who was an SEC mining attorney, Bruce Bragagnolo, with 20 years' experience, a very bright man. He's done a tremendous job. He's done everything right that you need to do with a junior mining company from the standpoint of finding the property, furthering the geology and taking the time to get proper financing. They're pouring gold this year for the first time, and that company, unlike many of the exploration juniors, is going to be a real producer. The stock on Timmins, not that long ago, was 40 cents and now it's over a dollar. We see $3 to $5 here rather quickly. It's a really classy company from the standpoint of all the things they have done to build the company, put it together, and make it run. They have a top-notch Mexican manager on site there in Mexico. They've got a great geologist. They've bought all this new equipment and rebuilt everything; they've been running and testing it. They've got plenty of capital; they've had the patience to put this company together properly. I just think that if I were going to buy three stocks and that was all that I could buy, I would buy Timmins as one of the three selections.

As far as Bravo, I am not as versed as I should be on all their projects because they've done a lot of shifting and changing around. But those guys are smart and aggressive, and they've been in this business for a long time. Here's the key point. Because I like trading and I'm a technical analyst, we've been able to recommend that stock in and out — I can't remember how many times — I would guess five or six times in the last two years — every time they've climbed 20% to 40%; maybe I got stopped out once and either broke even or lost a little bit once, but for some reason or other, Bravo stock is a good trading stock. If you want the shares to move and make money, that's one of the places I would go. And here once again, this is just from experience watching it since roughly 2006. I can assure you in the next quarter of next year they should be one of the best ones we have selected.

NioGold Mining Corporation (TSX-V: NOX)is another one we like. We had it in our letter as Miner of the Week. It's a smaller mining company that's gotten some good results from geology. They've got money; they've got the patience; they're in a good location.

With this crazy market, I worry about telling our readers to go ahead and buy 10 or 20 positions, because if I make a mistake and I'm wrong, a pile of invested cash is going to out the door, and they're going to lose it. So, I took the tack of let's take two or three — Clifton Star, Hecla, and then the other one, an ETF for silver, AGQ. We've done really well on that, too. We put our toe in the water and we'll see what's going to happen.

TGR: Roger, can we wrap up with your thoughts on where you think the price of gold is headed? Or investing in precious metals?

RW: I forecast that gold is going to go beyond $2,960, which is my highest number right now. You're getting to the point in the gold market where some of the really strong, big players — by that, I'm saying commodity funds with hundreds of millions of dollars — are saying gold is should easily be rising to $2,000.

And as far as investing, I think people are going to have to take more of a trading stance, rather than buy and hold. After what happened at Lehman, and what happened this year with prices mushing around, I suspect people understand they're going to have goals; they're going to have to trade a minimum of two times a year with these shares, and use other available trading vehicles, too. Volatility is increasing and is demanding more trade management than ever before. Opportunities are wider and larger than ever.

TGR: Thanks, Roger. Enlightening as always.

Roger Wiegand has devoted intensive research time to the precious metals, currency, energy and financial markets for more than 17 years. "TraderRog" also digests various domestic and international publications for economic, political, monetary and market news and commentary that inform his opinions and analyses.

Disclosures: Karen Roche personally and/or her family own none of the companies mentioned in this interview. The following companies mentioned in the interview are sponsors of The Gold Report: Nio Gold, Goldcorp, Miranda, and Timmins.

Roger Wiegand —I do not own shares in any companies and deliberately trade futures and commodities only to avoid ethical questions.None of these companies pay me any fees for recommendations. Some of them do, however, pay a modest one-time fee for reprint rights for using my professional journalist's writings and work.

Comments

[GMiki1]

The Dubai thing IS a BIG deal. But that doesn't mean the market can't rally next week. Interesting the knockdown in gold and silver and their associated stocks today, which makes a great entry point for some things, though I'll wait to see where Monday seems headed. I hold Bravo Venture Group as well. I like it. But I like all my juniors except for a couple that aren't even worth selling. :)

2009 Nov 27 08:03 PM

[JWG]

$2960?? Why not $2970? Or $2950?

Where do these guys get these silly pseudo-precise numbers?

The interviewer didn't even ask him how he arrives at his predictions....


Color me skeptical.

2009 Nov 27 09:16 PM

[Carl Martin]

This guy sure does throw some fancy numbers around with absolutely nothing to back them up......Gold to go beyond $2960, "heard" about 8.5 trillion in cash on the sidelines, "heard" that there once was 5000 gold juniors, "heard" that there are now about 1500. Says that inflation is at 7%.

I "heard" from my pet rock that there is 80.5 trillion in cash on the sidelines, "heard" there was once 50,000 gold juniors, "heard" there's only 150 now. So, I "told" my pet rock, that gold will go beyond 29,600 and inflation is at 70%.

If SA agrees to publish this than, it must all be true, right??? I'm offering just as much support for my numbers as the author offers for his. So, who shall you believe, him or me? At least I'm revealing my "source" of information! And, this article is supposed to be an "editor's" pick????

2009 Nov 28 06:26 AM

[Fibozachi]

one of the best infotainment pieces we've seen yet !!
wondering when mario lopez / tony little will be out with a gold product to push. i have a great hype tag: 'how and why gold could possibly one day reach $986,000 / oz !!'
would say a million but don't wanna seem sensationalistic with only adjectives to back up my 'argument' and not actual facts. gold bugs are truly fascinating creatures because even peak oil nymex traders aren't religious about their emotional fetish.

2009 Nov 28 06:34 AM

[notagoldbug]

dubai was very much expected as well as the caribbean islands - grand cayman..is next...britain is at the centre of the lending and they dont own any gold ... the current PM sold at 250

this is all part of the recovery process...i dont think its big ....

2009 Nov 28 09:47 AM

[Stephen12345]

How do these guy get the number??? $2960....

2009 Nov 28 09:49 AM

[swaps]

Weigand notes there is a classic double top in the S&P 500 but despite this he does not expect a significant decline.
I forget the exact month this year but a similar double top formed - and then the market shot higher rather than correcting. Presumably the plunge protection team stepped in - while it did not in the autumn and early winter of 2008.
The response to this intervention was continued spiking in the value of gold versus the U. S. dollar that is issued by and backed up by the full faith and credit of the privately owned Federal Reserve "bank".
Gold can only go higher as the Federal Reserve continues to drive down the value of the dollar. The gold market is holding The Federal Reserve accountable for this glaring failure while no one else does.

disclosure NGD, KGC

2009 Nov 28 09:57 AM

[MexCom]

Why $2,960? To my way of thinking if you took all the money and divided it by all the gold in oz. it would come up to several million dollars per ounce. Albeit some people would horde cash to buy coffee: $1.50 at St-bucks but only $.55 for me a the Sr. Citizen rate at McDonald's.

What would happen if the price of coffee went up relative to gold? Would people sell their gold to buy coffee?

2009 Nov 28 10:42 AM

[Jeff Nielson]

Chris, 7% inflation is the figure which John Williams of shadowstats is currently using.

Since the inflation numbers of the U.S. government are totally discredited, there are so many people who simply automatically refer to shadowstats numbers that they FORGET to provide their sources.

I agree with some of the criticisms that Wiegand does not provide enough evidence to support his conclusions. This is one of the reasons I don't pay as much attention to his writing as I used to.

His other problem is that he is an EXTREME partisan when it comes to U.S. politics - thus any of his analysis on the U.S. economy is EXTREMELY influenced by his personal biases, and simply not reliable.


On Nov 28 05:42 AM chris coonan wrote:

> I would like to know more why inflation is at 7% right now. I think
> that is a key proclamation in this article. I do agree with the
> statements regarding unemployment. I would like to see the proof
> of inflation however.

2009 Nov 28 10:56 AM

[TK5656]

"Chris, 7% inflation is the figure which John Williams of shadowstats is currently using."

John, I just looked at shadowstats and the chart is currently 3%. It is rising form a low of 1%. This guy Wiegand's statistics are BS. Is he a pump and dumper?

2009 Nov 28 01:12 PM

[CaptainJJack]

Gold at $2,960?

I know -- I will buy now, and then sell when it reaches $2,959.

I will get this letter, and it will tell me when it bottoms, again, and then I will buy.

And, there is still time, since the market crash he had predicted would have happened a month ago isn't happening until after next week.

I will be rich!!!

2009 Nov 28 01:46 PM

[bob dempsey]

have you gone to the grocery store lately


On Nov 28 05:42 AM chris coonan wrote:

> I would like to know more why inflation is at 7% right now. I think
> that is a key proclamation in this article. I do agree with the statements
> regarding unemployment. I would like to see the proof of inflation
> however.

2009 Nov 28 08:29 PM

[The Geoffster]

Gold is money. The dollar is money. It's your choice.

2009 Nov 28 08:47 PM

[Analyste de Boston]

I'm glad everyone else is as irked by the "$2960" toss. However, I'm interested in this idea, and why not "what's a real & fair price for gold?"

Ambrose-Pritchard made the case for $6,900 oz.
( tinyurl.com/yjmc8lp ). Once upon a time, the issuance of paper Dollars WAS governed by ratios. There's precedent for ballpark numbers like $2,400., given Helicopter Ben's DOUBLING the monetary base (BASENS) this year. But that's not sufficient.

After all, people forecast the EUR/USD, CAD/USD, JPY/USD, AUD/USD : why wouldn't we want to know Au/USD, too ?

2009 Nov 28 09:40 PM

[tungsten bug]

that price target is probably based on the reverse head and shoulders price action pattern that gold went through recently

draw a line from shoulder to shoulder, measure the distance from the top of the head to the line, apply that distance to the closing shoulder and you have a price target

or maybe something on the dollar index chart ?

price targets are just used to govern your behaviour in a trade anyway

2009 Nov 29 01:23 AM

[Boxed Merlot]

On Nov 28 06:26 AM Carl Martin wrote:

> This guy sure does throw some fancy numbers around with absolutely
> nothing to back them up......Gold to go beyond $2960, "heard" about
> 8.5 trillion in cash on the sidelines, "heard" that there once was
> 5000 gold juniors, "heard" that there are now about 1500. Says that
> inflation is at 7%.
> I "heard" from my pet rock that there is 80.5 trillion in cash on
> the sidelines, "heard" there was once 50,000 gold juniors, "heard"
> there's only 150 now. So, I "told" my pet rock, that gold will go
> beyond 29,600 and inflation is at 70%.
> If SA agrees to publish this than, it must all be true, right???
> I'm offering just as much support for my numbers as the author offers
> for his. So, who shall you believe, him or me? At least I'm revealing
> my "source" of information! And, this article is supposed to be an
> "editor's" pick????

On Nov 28 06:34 AM Fibozachi wrote:
> one of the best infotainment pieces we've seen yet !!
> wondering when mario lopez / tony little will be out with a gold
> product to push. i have a great hype tag: 'how and why gold could
> possibly one day reach $986,000 / oz !!'
> would say a million but don't wanna seem sensationalistic with only
> adjectives to back up my 'argument' and not actual facts. gold bugs
> are truly fascinating creatures because even peak oil nymex traders
> aren't religious about their emotional fetish.


I think you may be misinterpreting the overall tenor of the article. Unfortunately, from what I’ve read, the titles aren’t always the ones given by the submitters and may be a bit misleading.
My take on the interview was that the miners, particularly the junior miners with solid mining reserves, experienced management, favorable geo-political locations and currently adequate financing in place to carry on their business will benefit from the increase in investment capital that will be flowing into this sector of the market. Interestingly enough, his take of a stock/future trade and not a buy and hold of the physical Au, (standard definition of “Gold Bug”), is what’s being advocated, at least until the commodity reaches a level of FRN 2960. per oz, which in his estimation is when the biggest investors will enter and retire the smaller investors at a handsome profit. Makes pretty good sense to me.

2009 Nov 29 01:38 AM

[American in Paris]

There isn't going to be any hyperinflation. Japan's Lost Decade is far more relevant than the Weimar Republic.

It amazes me how these so-called smart money spends its time riding bubbles. And citing out-dated conventional wisdom.

Adjust for the risk in these leveraged hedge funds and most of them probably underperform the Vanguard index funds and ETFs.

If you were really a good hedge manager, you will be looking for ways to bet on this bubble bursting. And you know there are ways to do that other than shorting GLD. :)

"Practical men, who think themselves exempt from theoretical influences, are usually the slaves of some defunct philosopher."

- John Maynard Keynes.

2009 Nov 29 07:08 AM

[American in Paris]

The fact that there is adequate funding doesn't change the fact this article is shoddy marketing.

Clearly gold is in a bubble, just the like Dotcoms and the real estate bubbles. No one knows when it will burst, but it will burst.

The hyperinflation hypothesis is dumber than a rock. The advocates show have little understanding of how monetary policy works and the role played by the velocity of money.


On Nov 29 01:38 AM Boxed Merlot wrote:

> On Nov 28 06:26 AM Carl Martin wrote:

2009 Nov 29 07:33 AM

[Boxed Merlot]

On Nov 29 07:33 AM American in Paris wrote:

> The fact that there is adequate funding doesn't change the fact this
> article is shoddy marketing.
>
> Clearly gold is in a bubble, just the like Dotcoms and the real estate
> bubbles. No one knows when it will burst, but it will burst.
>
> The hyperinflation hypothesis is dumber than a rock. The advocates
> show have little understanding of how monetary policy works and the
> role played by the velocity of money.


It’s not that difficult to understand that velocity is roughly equivalent to the nature of electricity, i.e. voltage/amperage/watts or the flow of water through a restricted channel or tube. The concern is that with the Fed attempting to encourage the 4T FRN in 0% interest rate accounts with the addition of 2T diluting “shares” still not breaking them loose, this in my opinion is testament that the holders of these “assets” believe evaporation is to be preferred over confiscation at the point of conversion to goods or services. In other words, velocity equals the GS/Government’s point of sucking the life from them and they’re waiting for the fever to pass. imho

2009 Nov 29 11:16 AM

[thotdoc]

If you believe the US is able to print its way out of this mess, don't buy Gold. In this case, you believe the direction of inertia of all the interconnected financial systems that are dependent on bubbles can be reversed by increasing debt to get us out of debt. You believe nothing will go wrong. It will all turn out OK in the end, because we are Americans and God loves us.

You also believe that those in charge, the banksters, are working their asses off to help the world right itself, because that is what it would take to reverse the inertia. You believe the banksters, who are in charge of the finances, will do an about face and begin to do what is best for everyone.

If you believe the mess we are in has an inertia of its own and that the inertia will continue in motion in the direction it has been going buy Gold.

Now, if you believe the latter, do you care what price goes to?

If you want to be safe, no. You are just hedging. If it goes up, the hedge worked. If it all turns out OK and you lose 20%, that's OK because the rest of your investments didn't tank.

If you want to make a profit, you care what price it goes to. And, if you want to make a profit you will have to ride the ups and downs. Just don't make the mistake of thinking in an either or manner, or only reading those articles that support your wish.

My take: You can't spend your way out of a debt problem. You can't solve the bubble economy by creating new bubbles.

Please note: If your time line is short, it can look like you can get away with those things. But, I believe that short time is over and we are heading into the long haul. Please tell me, us, what will change the inertia. I'll read and digest that article.

You always get what you deserve.

2009 Nov 29 11:49 AM