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Lejun James Shao is the founder of www.myIRAs.net (http://www.myIRAs.net/), WhitePine Investment Inc of USA, and CEO of WhitePine Software Inc, Beijing, China. He was the top finisher in MSN's 1st US One Million Dollar Investment Contest, "Strategy Open Tournament," with a +45.88% return in 4... More
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  • Where Will Gold Price be Headed for 2010 1 comment
    Feb 6, 2010 3:43 PM

    Gold prices and gold sector is one of the bright spots in 2009. For the year, gold prices went up 40%, reached as high as $1,200 per ounce. Many gold stocks did much better. It is not uncommon to see many gained 400% - 500% last year.

    Now the question is " Can we see the same performance this year?"

    Many analysts say Yes. Some predicted that we may see $1,800 per ounce this year, 50% from last year's high and 80% from current price. Oh!!!

    But I am not so optimistic at all. In fact my view for the gold price in 2010 is the opposite. I believe that we will see flat or even meld decline for the gold price in 2010.

    Here is my reasoning:

    1. If you look at long term trend, yes, gold is very bullish. But the trend is always that one year up followed by next year's adjustment. This is the year which will spend most of its time to digest last year's gains. See GLD chart since 2005;

    2. The force behind last year's gain in gold prices is directly linked to world wide relaxed money policies. Almost all countries were printing huge amount of money to stimulate falling economy. Gold was used as a hedging tool. Entering 2010, the trend is that government will tighten their policies. So is the gold price.

    3. When gold has appeared in the headlines (Yahoo started to show gold daily prices in its financial home page from last December) of most medias, the price is topped. No easy money can be made.

    My view:

    Gold price will be traded in a rage this year with high of $1,200 and low of $900 this year.

    Of course there are always some good stocks worth to own even the sector as a whole is not favorable.

    Disclosure: our fund is long on AZK but not others.

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  • Tom Au, CFA
    , contributor
    Comments (6879) | Send Message
    A very well reasoned point of view. As good a "guess" as any.
    6 Feb 2010, 05:26 PM Reply Like
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