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In many ways The Gold Informant is just an average Joe. Coming from a fairly typical middle-class family, he married, raised a couple of his own children and now enjoys the pleasures of being a grandfather. Life experience has been both typical and atypical. Working in various fields and having... More
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  • Where Will Gold Go From Here? 0 comments
    Jan 31, 2012 5:23 PM

    Yesterday we discussed some of the reasons that gold surged forward so much recently. These are mainly domestic reasons, although they certainly do affect the world economy. Another consideration in regard to recent moves in gold may be coming as a result of U.S. foreign policy as well.

    The US and EU have placed an embargo on Iran. Because of this, and in light of oil being traded in U.S. dollars, there are some dynamics at work that are easy to miss. One of them is that this embargo puts a stranglehold on more than Iran. It does so to every country dependent upon Iranian oil. As a result, there are rumors floating around that India is buying Iranian oil with gold, shooting for a loophole in the embargo. Whether it's true or not, I couldn't say. But it is another possible factor in gold's recent rise.

    So, where will it go from here? Up, for sure. It is entirely possible that we'll see another strong pullback. Some seem to expect it, maybe as far back as 1400. However, with recent developments, and if gold continues to surge ahead, it's entirely possible that we may never see 1700 again. Today markets are very flat.

    What are experts saying about gold's price? Overall, there are expectations that gold will break records again. But in regard to how much, while most figures are around the $2000 mark, there are some who have great expectations, or at least see possibilities, for gold in 2012.

    In the September, 2011, issue of The McAlvany Intelligence Advisor, Egon von Greyerz has some very interesting ideas. The following bullet points include information from his article.

    • At a GATA conference last year, Adrian Douglas apparently did the math, taking paper derivatives into account (32 paper oz. for every 33 oz. traded). He claimed that gold would be at $53,000 per ounce if all trading reverted back to actual physical gold.
    • If gold reserves were at the same percentage of US debt as in 1913 (the advent of the Fed), "Gold would then be $27,000 today and going up to $33,000 in 2015 with a projected increase in debt of $6.5 trillion."
    • He noted that "in 1923 in the Weimar Republic, gold reached 100 trillion marks."

    As you can see, these projections are not based on actual expectations, but in consideration of the current inflationary policies. In the December, 2011, issue of MIA, Don McAlvany expects gold to shoot up to $3500 to $5000, but doesn't provide a time frame.

    An anonymous hedge fund guru is quoted as expecting $2000-$3000 per ounce by the end of the year. "Gold is at the intersection of money trends. The only non-fake money is gold."

    On King World News, Stephen Leeb, Chairman & Chief Investment Officer of Leeb Capital Investment, said, "gold could finish this year around $3000.

    In another King World News article, Eric Sprott, Chairman of Sprott Asset Management, expects gold to climb above $2000 in 2012.

    Jim Sinclair is quoted in another King World News article, "$1,700 to $2,100 gold is a conservative range."

    Tim Iacono of Iacono Research expects gold to hit $2000 this year, but doesn't necessarily think it'll end the year that high. Parsimony Investment Research apparently agrees with him.

    These last predictions are pretty conservative. While I would expect greater volatility this year due to economic turmoil both foreign and domestic, the huge spike that many are expecting may turn out to be elusive for 2012. The $2000 mark, in my estimation, will be shattered. But, like Tim Iacono, I don't know that I would expect gold to end the year over $2000. It's a psychological resistance level, even if it's not a technical one. And, for gold, sentiment goes a long way; sometimes driving technical analysis to its knees.

    We keep reminding you that it's an election year as well. Rising gold does not make politicians look good. Falling dollars do not make them look good. The lower Federal Reserve rate allows people to keep on spending, which makes them feel good. Expect the string pullers to do all they can to come up smelling like roses come election time.

    For your prosperity,
    J. Keith Johnson

    The Gold Informant

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