Roundtable Gold Predictions

Below is a summary of recent projections by some of the major names in the online financial community gathered by Bespoke Investment Group along with their views on gold and whether it is a bubble:

A Dash of Insight: I do not know of a way of getting a “fair value” for gold.  This year gold prices benefited from a weak dollar, the fear of deflation trade, and the fear of hyperinflation. It seems like all three of these are at extremes, but there is a profitable market in selling fear.  The commissions and margins are much better than for those of us who provide investment advice over a range of asset classes for a flat fee.

Financial Armageddon:  Still very bubbly and vulnerable to a major shake-out, but my longer-term outlook remains bullish.

Paul Kedrosky: Fairly valued, with risk to downside if economic expansion continues.

Investment Postcards: In times of uncertainty regarding major currencies and high volatilities on the cross rates, gold remains the ultimate currency to hold. From another perspective, the use of gold in jewelry manufacturing and the private hoarding of gold by the newly-founded wealth in developing economies such as China and India are underscoring the physical market.

Random Roger: As said last year, we own gold in the belief that no matter the price, if something bad happens today it would go up tomorrow.  To which I would add that if gold is the best performing thing you have then chances are stocks are not doing very well.  We own gold but we never root for it.

The Reformed Broker: I hate gold.  And I’ve been long the gold ETFs, the miners, the other precious metals, etc for 2 years now.  My attitude is that I’ll stay long and ride this stuff with trailing stops. It will go up until people get bored with it.  The sell-off, when it comes, will be shocking in its violence and brutality – but that may come from much higher levels.

Vix and More: Investment demand for gold should continue in 2011 and while there will be pull backs, gold is not experiencing a bubble.  The metal is fairly valued at the moment and will see volatile trading in 2011, ultimately ending the year up.

Wall St. Cheat Sheet: If inflation hits, gold will go blast off.  People thought the “Cash4Gold” commercials were a sign of the top, BUT they failed to realize this was a sign of people SELLING gold, not BUYING in a frenzy. Our Gold & Silver Premium subscribers have made a killing despite all the bubble talk in the media.

Crossing Wall Street: Gold is fairly valued now.  As long as rates stay low, gold will do well.  However, once the Fed starts to end the free money party, gold will get hammered.  High real rates are like Krypton for gold (I think I’m mixing my metaphors).

Bron Suchecki

The Perth Mint Blog