By Dan Dorfman
Talking about gold with Mark Leibovit, one of the country’s dogged and frequently controversial gold trackers, is never dull or boring. Unlike many of his peers, Leibovit, a long-term gold bull, has no qualms about shouting fire when he thinks the price of the metal is headed south. You never know what he’s going to say or when he’ll occasionally shock you with some seemingly strange, off-the-wall forecast. Here’s a case in point. During a chat we had in September of 2009, just a few days after the price of the precious metal had just topped $1,000 an ounce on inflation worries and a weakening dollar, he suddenly struck me with the kind of talk you might expect from the strait-jacket crowd. “We will never see gold again below $1,000 in our lifetime.” he told me.
What a daffy, utterly insane remark, I thought. With gold as volatile as it is and the price of the metal at the time just a hair above $1,000 and often subject to violent price swings, I figured this poor guy must be mad. How can he be so cocksure?
Guess what? Leibovit, who has been right so far on that brash $1,000 prediction, is back with another wild forecast. This one: “The possibility we may never see gold trade in the $1,300s again.” That’s another strange one, given that gold. currently trading at around $1,567, just $267 away from that $1,300 figure. Clearly, his prediction is fraught with risk and he could very easily be dead wrong.
Leibovit, though, is not a fella to be taken lightly when it comes to calling the ups and downs in gold. Indicative of this, Leibovit, the chief market strategist of the VR Gold Letter, a well-regarded Arizona-based online precious metals newsletter, was rated 2011′s top gold market timer by Timer Digest Magazine.
Leibovit also talked to me of the prospects of a snazzy gold rebound, but accompanied, he says, by the possibility that the recent selloff could drag the metal down near term to the $1,400s. He also believes that last week’s drop in the metal to $1,526.50 may have marked the bottom in gold, “We’re still in a 20-year up cycle that began in 2000,” he says. “It could be another five or six years, maybe not before 2018, until a top is reached in gold. And if we break through such resistance levels as $1,610, $1,670 and $1,792–which is quite plausible–we could see $2,500 before year end.”
If he’s right–and that’s a big if–gold would reach an all-time high, breaking its previous record of $1,924, which occurred in September of 2011.
It should be pointed out that when Leibovit made his provocative $1,000 forecast in September of 2009, he and a number of other gold bulls also predicted at the time that the metal would surpass $2,000 before year-end 2011 and perhaps hit $3,000 in the first half of 2012. That 2011 goal never came to pass and the $3,000 projection, at least at the moment, seems far-fetched, what with gold recently under a fair amount of selling pressure and trading at around $1572.
What’s more, that $3,000 forecast has almost become extinct, practically going the way of the rotary telephone, black and white TV sets and $25 doctor home visits. Why so? Because, as investors know, gold has been on the skids, tumbling roughly 50% from its peak. Likewise, it has repeatedly come under pressure in recent months in the face of Europe’s worsening economic and debt mess, the threat of Greece pulling out of the Euro, a strengthening greenback, which recently turned in 14 days of consecutive gains, no firm evidence of any fresh quantitative easing in sight (although some pros say it’s only a matter of time in the face of a softening U.S. economy) and diminishing gold purchases from India.
Ridiculing the financial press, which, he argues, is basically negative on gold, Leibovit contends today’s trends–a dollar that’s going to hell (despite a recent rally), a growing distrust of paper currencies, round-the-world, non-stop money printing and no end in sight to Europe’s debt and economic problems–are unmistakable evidence that gold is headed higher. Adding to that likelihood, he adds, is his belief that what we’re seeing in Greece, Italy and Spain will ultimately come to the U.S. Yet another plus, as he sees it: the coming end of gold’s traditional summer doldrums.
Leibovit, who has frequently griped about what he claims is a government conspiracy to hold down the price of gold, thinks the flight to safety will be the prevailing gold motivator over the near term since he considers long term bonds dangerous.
One of his favorite plays is the Canadian Mint (MNT), which trades on the Toronto Stock Exchange and enables investors to convert their shares into physical gold. Another is Central Fund of Canada, Ltd. (CEF), which invests primarily in long-term holdings of gold and silver bullion.
On the other hand, Leibovit says he would shun two of the leading and most popular gold and silver trusts–SPDER Gold Trust (GLD) and iShares Silver Trust (SLV). That’s based on his belief, which both trusts would heatedly challenge, is they don’t have all the gold and silver they claim to hold.
Gold, concludes Leibovit, is the super hedge. Sure there will be volatility and selloffs, as there is in every market, but what’s most relevant to investors, he says, is that the overall trend remains up.
He may be right, but given that gold has been languishing around the mid-$1,600s in recent months and has now taken several steps downward to the $1,500s raises the obvious question of just how golden gold is right now. It could well be that Leibovit may live to regret his bold comments that we may never again see gold at $1,300 or $1,000. Or, who knows, he may be right on.