Gold to Reach 2250 per Ounce by 2015 With no Crash in 2011
Gold hit a record high above $1,500 an ounce for a fifth-consecutive session on Thursday, driven by a laundry list of factors, including inflationary pressures in some key economies, the lack of a clear plan to deal with the U.S. deficit, and the sovereign debt woes in Europe.
Investing in “Gold” has been called a “Fool’s Game” but many financial advisers are adding to their positions in the increasingly costly asset as concerns about the fiscal messes in the United States and Europe mount. When everything is going gold’s way, that sets off alarm bells because traders are saying the gold market has topped out and now is the time to sell while there are still people willing to buy.
Looking back over more than 100 years, stocks have substantially outperformed gold, and for those looking for a hedge against inflation, more value can be found by buying companies that do well in inflationary environments. Still, there are a lot people that take a short-to-medium-term-view that gold is still a good bet. Growing demand for precious metals in both emerging and mature markets will push gold to increase by another 20 percent to 25 percent over the medium term.
Twelve analysts polled by Reuters said gold’s decade-long bull run could continue for four more years, albeit at a slower pace, with the average price in 2015 seen as low as $1,700 to as high as $2,250. There are “Cycles” and “Bubbles” in which gold outperforms the market and by a fairly dramatic amount, we’re in that cycle right now.
The U.S. dollar has been languishing in the wake of the U.S. Federal Reserve’s move to use quantitative easing — basically printing money — starting in late 2008 to stimulate the economy, racking up trillions in debt. The greenback is sitting at a three-year low against a basket of currencies, and could take a run at the record low it hit in 2008. As long as the dollar remains weak, we’ll see appreciation in gold.