Gold Forecast to Hit $1600 This Year
Commodities / Gold and Silver 2010
Sep 16, 2010 - 03:45 AM
By: The_Gold_Report
International Forecaster Editor Bob Chapman believes the world is headed for a single governing structure where gold and silver are commonly traded currencies. In this exclusive interview with The Gold Report, Bob tells you why he thinks gold could still hit $1,600 this year despite the government's efforts to smother the gold price. He also offers a handful of equities he believes are worthwhile investments in such a price environment.
marketoracle.co.uk
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TGR: Do you have some projections for gold and silver in a quickly rising inflationary environment?
BC:
I think that this year gold will be anywhere from $1,450 to $1,650.
It's very doable without some terrible event happening, which would cause it to go even higher. If you look at the official inflation figures since 1980, gold should be selling at $2,400 an ounce. If you take John Williams' figures, it's $7,600 an ounce. Gold and silver are both underpriced.
TGR: What about in 2011?
BC: Next year I believe it'll be higher. It has been the official policy of the United States government and the Federal Reserve and other Central Banks to suppress the price of gold and silver.
TGR: How do they do that?
BC: They do it through the President's Working Group on Financial Markets, which was instituted in August of 1988. They are using that to interfere in the market. Look at the markets from day to day. I used to be a tape reader and I was a trader for 25 years. You get rhythms from markets. You can see the Fed in there along with the Treasury department making the market do things that they want it to do.
TGR: That's a little difficult to believe.
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BC: I think that on the U.S. Dollar Index (USDX), the dollar could go down to the 45 mark. On the other hand it's about 82 right now, down from 89 and up from 74, six or seven months ago. If you think the dollar is going to go down in value, as I do, in order to hedge against that one could buy Treasury Securities denominated in Swiss francs or Canadian dollars. I think those two currencies will do well versus the dollar.
If you look at the figures for the last seven years, you'll find that every currency in the world went down versus gold. In the first six months of 2010, most of the major currencies went down 12% or 13%. The final arbiter here is gold. The question is who's going to win? Is gold going to become the ultimate currency or is it the dollar or will it be another currency? It's hard for another currency to compete with gold with all the debt out there and all the problems the world's got when you have a fiat currency that's backed by nothing. The only currency out there that has a backing of gold is the euro; it used to be that 15% of the currency was backed by gold, but now it's about 7%.
TGR: But for people who want exposure to gold and silver through equities, what do you think investors should do?
BC: Well, I recommend four stocks,
Agnico-Eagle Mines Ltd. (NYSE:AEM; TSX:AEM),
Goldcorp Inc. (NYSE:GG; TSX:G),
Silver Standard Resources Inc. (TSX:SSO; NASDAQ:SSRI) and
Minefinders Corporation (TSX:MFL; NYSE:MFN). That's it. If people want to speculate, that's fine.
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