Citing the current persistent environment of low or negative interest rates around the world, some analysts believe the metal can reach as high as $8,000.

Gold has now closed its second consecutive week above its previous all-time high, and considerably so. The $1,911 figure that was so often cited was blazed through as the metal breached the high from 2011 and kept on climbing. Despite calls for a pullback a week prior, gold closed Friday's trading session at $1,976, having traded comfortably in that range throughout the day. With $2,000 looking to be the next capture, analysts and banks have differing opinions as to how high gold can go, although they appear unanimous in terms of the trajectory.

Barry Dawes, executive chairman at Martin Place Securities, sees $3,500 as a target that's reachable in the next two years. Although it might seem lofty, such a climb would not be unprecedented, and Dawes is far from the only issuer of this forecast. Over the past two years, gold has already demonstrated the ability to appreciate by nearly 50%. There is also no shortage of figures in finance who are expecting such movements, with Quadriga Igneo fund manager Diego Parrilla listing $5,000 as a possible level over the next three to five years.

To Dawes, the most impressive part about gold's performance was the ease with which the metal cleared both $1,800 and its previous all-time record, as some had thought the metal might encounter resistance around both levels.

Goldman Sachs, whose analysts have consistently upgraded their gold forecast over the previous months, now sees gold reaching$2,300 over the next 12 months. Previously, they had pegged $2,000 as the level to reach within that timeframe. Goldman cited the persistent environment of low or negative interest rates around the world as a primary reason for their bullish view. Besides this, concerns over the economic recovery moving forward, worries over the dollar's status and a flare-up between the U.S. and China have all acted as powerful tailwinds. The events over the last couple of months seem to have aggravated existing issues between the two nations, with each of them shutting down the other's consulate in a clear display of rapidly-worsening relations.

Juerg Kiener, managing director of Swiss Asia Capital, has a similarly bullish forecast for gold's price based on the technical picture. In a recent interview with CNBC, Kiener delved into the technicals and explained that gold's current price movement looks to be signaling $2,834 in the near future, stating that his long-term expectations are even higher. Kiener also noted that gold has historically bounced back seven to eight times higher from its bottom. In Kiener's example of a $1,050 bottom, gold would eventually go on towards $8,000. Interestingly enough, many pundits have stated that gold had reached a bottom of $1,200 in 2018.

Thursday, May 19, 2016

Could Some Forms of Gold Investments Be Better Than Others?

Why does this writer hate some forms of investing in gold, but love others? The rationale is even more simple than you may think.

Writing for MarketWatch, Cody Willard recently examined the various forms of exposure to gold and how they bode for the average person looking to protect their savings. For his part, Willard believes the best course of action is to stick to coins and bars and avoid stocks, ETFs and the like – regardless of the potential for short-term profit.

Willard writes that the issue with mining stocks is one of debt: Most mining companies are currently working under massive debt and are therefore dependent on higher gold prices. Everyone involved in gold likes high prices, but the miners absolutely need them; Willard explains that miners aren't able to profit when gold stays in the $1,100 range, and that they require prices to be at least over $1,300 in order to be profitable.

Likewise, gold ETFs do little to fix the problem of uncertainty. In the event of a crisis, these funds could very well be unable to deliver the gold they owe to investors – in fact, many believe that precious metals ETFs are already operating on good will and lack the physical gold that they purport to have.

For Willard, gold is all about certainty, so investing in the metal should serve as a hedge against the long-term risks of currency devaluation and other forms of central bank disruption, not bring more risks to a portfolio.

Looking towards the future, Willard believes that gold prices will hit $2,000 per ounce sometime in the next decade. Furthermore, he expects the Fed to formally enter an easing cycle again in the next few months, which could act as a tipping point for a 20-30% spike in gold prices, if not higher.

Is the dollar's dominance in jeopardy? Could other currencies achieve reserve currency status? Find out here.