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« Gold prices nudge $1250/oz, are you prepared? | Main | The Gold Bugs Index (HUI) Update 08 June 2010 »
Tuesday
Jun082010

$1,300 on Double Dip, GFMS Forecasts

Bloomberg Logo.jpg

This is an interesting view of gold prices in the context of a possibility of a double dip recession by Aya Takada and Yasumasa Song on Bloomberg Business Week. If you are short on gold then you may want to pass on this one.

June 8 (Bloomberg) -- Gold, trading within 1.5 percent of a record, may rally to an all-time high as investors seek a haven for their wealth, including protection from a possible double- dip recession in the global economy, according to GFMS Ltd.

The metal is expected to trade between $1,050 and $1,300 an ounce for the rest of the year, and may rally to as much as $2,000 should the sovereign-debt crisis spread beyond Europe, possibly to the U.S., Chief Executive Officer Paul Walker said in an interview. Gold may also surpass platinum prices, he said.

Gold has increased 13 percent this year as Europe’s fiscal crisis has weakened the euro and rattled global financial markets. Deutsche Bank AG said June 3 that gold may surge to $1,700 as currencies slump, according to Michael Lewis, head of commodities research at Germany’s biggest lender.

“What’s happening in Europe at the moment increases the probability that we will see a double dip,” said Walker, who joined the independent, London-based research company, which produces an annual market survey, in 1995. “The investment case for gold is going to remain robust for the rest of this year.”

Gold reached a record at $1,249.40 an ounce on May 14 and has surged almost five-fold since touching a 20-year low in 1999. The precious metal for immediate delivery was at $1,238.71 an ounce at 8:38 a.m. in Singapore, on course for a 10th annual gain.

‘Economic Crisis’

“If there is a double dip, it will be a reflection of a long-term economic crisis” and that may be good for gold, Walker said yesterday from Tokyo. Any increase in investment will likely “push gold towards $1,300,” he said.

The euro has tumbled to a four-year low against the dollar amid investor concern that Europe’s debt crisis may engulf Hungary, spreading beyond Greece to Eastern Europe. European finance ministers put the finishing touches yesterday to a rescue fund being backed by 440 billion euros ($524 billion) in national guarantees, seeking to halt the turmoil.

Walker didn’t rule out the possibility that the sovereign- debt crisis may expand from Europe to other regions. That may push gold “significantly higher” than $1,300 an ounce, or by a further $500 to $700, he said.

“If you look at the United States, compared to Europe as a single entity, in many respects the U.S. looks worse than Europe,” Walker said. “The U.S. government has got a budget that is getting worse every hour, every day.”


Have a good one.

Got a comment then please add it to this article, all opinions are welcome and very much appreciated by both our readership and the team here.

The latest trade from our options team was slightly more sophisticated in that we shorted a PUT as follows:

On Friday 7th May our premium options trading service OPTIONTRADER opened a speculative short term trade on GLD Puts, signalling to short sell the $105 May-10 Puts series at $0.09.

On Tuesday the 11th May we bought back the puts for just $0.05, making a 44.44% profit in just 4 days.



Accumulated Profits from Investing $1000 in each OPTIONTRADE signal 14 May 2010.jpg

Recently our premium options trading service OPTIONTRADER has been putting in a great performance, the last 16 trades with an average gain of 42.73% per trade, in an average of just under 38 days per trade. Click here to sign up or find out more.


Silver-prices.net have been rather fortunate to close both the $15.00 and the $16.00 options trade on Silver Wheaton Corporation, with both returning a little over 100% profit.

To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.

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Reader Comments (5)

haha! i am short gold now! i tried on sunday at 1220 but was stopped out at 1218 on monday. now i am short from 1248. wish me luck! expecting 1160 in about a week.

June 8, 2010 | Unregistered CommenterDi

Why should anybody wish you luck when I would guess most people are bullish. You may prove me wrong, but that is the way trading goes.

June 8, 2010 | Unregistered CommenterRyszard

somebody else did it then, because we are closing down, 1235 now.
i am recalculating my targets. target is now at 1130, and the confirmation of being this a long term top is: break below 1218

June 8, 2010 | Unregistered CommenterDi

Yeah, shorting a breakout to all time highs in a raging bull market...BRILLIANT! And not to pick up a couple of ducats on a breakout pullback, which is the best a real pro might expect to glean from such a move, but to harvest a 7% drop in a week.

Could it happen? Yeah. ANYTHING can happen. And it's a fool's bet.

Good luck indeed. You're gonna need it.

By the way, how do you "calculate your targets?" Please tell me no animals are harmed in the process.

June 8, 2010 | Unregistered Commenterfallingman

No! I am not shorting the breakout. The breakout would be going above 1266 on a strong up daily candle and staying there after hours. This is a typical breakout failure. Of course the trade could not work out if we don't drop today, it could trade a bit more at the high, and prepare another attempt, that's why i reduced my stoploss almost to the entry point.
Thanks, i take the luck, i need it.

June 9, 2010 | Unregistered CommenterDi

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