If you’re trading gold, you might want to take notice of yesterday’s forecast from GFMS, a London-based precious metals consultancy. It sees gold spiking to $1,100 within the year…followed by a crash back to $600.
“Investment demand alone is supporting the present rally,” reasons its report “while jewelry demand is essentially unchanged.” The firm’s research director, Neil Meader, sees an eventual U.S. economic recovery with a return to rising interest rates. Once that happens, "The whole basket of drivers we've seen supporting the price will unwind."
“GFMS’s analysis of the economic situation is conventional,” writes Ed Bugos, “and discounts the magnitude of the inflationary cycle. It’s not telling investors they should own gold to protect themselves from the ultimate effects of the unprecedented worldwide manipulation of money and interest. It can't. But there is no sign of stopping those policies.” As it happens, Ed shares GFMS’s medium-term outlook of gold shooting up before a sharp correction — though not back to $600. “Anything is possible,” he says, “but that price wouldn’t last a week.”
— GFMS’s comments on gold reflect the conventional wisdom on commodities in general today: With prices rising as fast as they have, are commodities in a bubble?
"The changing behavior of commodity investors and speculators increases our conviction,” says Bank Credit Analyst, “that commodities are on an eventual path toward a mania-like overshoot.”
A Moscow Times columnist frets that falling oil prices might send Russia hurtling back toward the economic tumult that accompanied the end of the Soviet Union, or at least the crisis of 1998.
Kevin Kerr doesn’t think so. “I even got into a little debate on this topic with two of the staff writers at Barron's and one from The Wall Street Journal,” said Kevin as he made his rounds of the business news channels yesterday. “They peppered me with questions, one after the other. One was adamant that the grain markets are clearly in a bubble and that global demand is a myth and that this year’s crops in the U.S. will be more than plentiful to cover demand.
“Actually, I told him I think it's the exact opposite. After all, blizzard conditions in Minnesota and more flooding in Indiana mean planting is out of the question. It's April 10 now... tick-tock, tick-tock, every day closer to May means less and less yield and certainly more risk for corn if it's planted late. Come July, much of it will just wither away.
“If anything, we are in abut the fourth inning of this game and prices have a long way to go.” He’ll learn the straight skinny firsthand, next week. Stay tuned.
“Investment demand alone is supporting the present rally,” reasons its report “while jewelry demand is essentially unchanged.” The firm’s research director, Neil Meader, sees an eventual U.S. economic recovery with a return to rising interest rates. Once that happens, "The whole basket of drivers we've seen supporting the price will unwind."
“GFMS’s analysis of the economic situation is conventional,” writes Ed Bugos, “and discounts the magnitude of the inflationary cycle. It’s not telling investors they should own gold to protect themselves from the ultimate effects of the unprecedented worldwide manipulation of money and interest. It can't. But there is no sign of stopping those policies.” As it happens, Ed shares GFMS’s medium-term outlook of gold shooting up before a sharp correction — though not back to $600. “Anything is possible,” he says, “but that price wouldn’t last a week.”
— GFMS’s comments on gold reflect the conventional wisdom on commodities in general today: With prices rising as fast as they have, are commodities in a bubble?
"The changing behavior of commodity investors and speculators increases our conviction,” says Bank Credit Analyst, “that commodities are on an eventual path toward a mania-like overshoot.”
A Moscow Times columnist frets that falling oil prices might send Russia hurtling back toward the economic tumult that accompanied the end of the Soviet Union, or at least the crisis of 1998.
Kevin Kerr doesn’t think so. “I even got into a little debate on this topic with two of the staff writers at Barron's and one from The Wall Street Journal,” said Kevin as he made his rounds of the business news channels yesterday. “They peppered me with questions, one after the other. One was adamant that the grain markets are clearly in a bubble and that global demand is a myth and that this year’s crops in the U.S. will be more than plentiful to cover demand.
“Actually, I told him I think it's the exact opposite. After all, blizzard conditions in Minnesota and more flooding in Indiana mean planting is out of the question. It's April 10 now... tick-tock, tick-tock, every day closer to May means less and less yield and certainly more risk for corn if it's planted late. Come July, much of it will just wither away.
“If anything, we are in abut the fourth inning of this game and prices have a long way to go.” He’ll learn the straight skinny firsthand, next week. Stay tuned.
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