Where Do Gold & Silver Prices Go From Here And Do The Experts Have A Clue?

March 10, 2014

It’s not been a good start to the year for gold analysts. Nomura has just been revising its 2014 forecasts upwards. That’s always a way to make sure you meet your forecast for the year. It helps too if you start by pointing it in the right direction.

Readers of the ArabianMoney private circulation newsletter (sign-up here) will recall how we saw a double-bottom formed by the December low last year and presented a rosy outlook for 2104 to some loud cat calling from some quarters. Both gold and silver quickly stepped up to the mark and left the S&P 500 in the shade in January.

$1,350 gold

With a little help from Russian President Vladimir Putin, who clearly has other things on his mind, gold topped $1,350 an ounce last week. Crisis over and the gold price fell back a little but mainly kept its geopolitical, safe haven premium. Where do gold and silver prices go from here?

We think a lot will depend on how the S&P 500 performs amid some very mixed economic data, particularly on US jobs. Can the stock market really breakout in this environment or will it begin to correct and fall into a steep decline to complete the long post-2000 secular bear market?

In reflective moments we glad that we did not take an optimistic view of the US stock market back then and basically watch our money sit idle for 14 years while inflation whittled away its real value. If the S&P 500 pattern completes then investors will be back to ground zero. Gold’s up four-fold in that timeframe.

How the US dollar holds up will also be critical as gold is usually a prime beneficiary of a weakening dollar. Steep falls on the US stock markets will rally the dollar temporarily and hit gold which will also suffer from selling for margin calls. But the rebound for gold and silver could be rapid and strong as it was in 2009.

At the start of the year we begged to differ from those who wanted to buy gold and silver but decided to wait for a buying opportunity. Just where is the $1,050 gold that Goldman Sachs promised its investors? A sell-off to that level is still possible but a shift to still higher gold prices looks more likely, however the economy turns out.

QE or not QE?

If the US economy weakens and stocks fall then the tapering of QE money printing will have to stop and be reversed. That would be great for gold and silver prices.

Then again if the US economic recovery proves to be as strong as some economists would have us believe then inflation will rear its head as a threat on the horizon and that would also be great for gold and silver prices. We simply don’t believe that higher interest rates would put investors off owning gold if this inflation risk was back in play.

Win-win situations are always the best ones to be in for investors and so far, so good for gold and silver in 2014. Readers of our monthly newsletter will know that we think silver will outperform and have our own ideas how to leverage this up for maximum gains. One of our top tips was up 50 per cent on Friday!



Peter Cooper has been a senior business and financial journalist for 20 years. Since selling his dot-com news website before the global financial crisis he's been a gold and silver investor. Cooper studied politics, philosophy and economics at Trinity College, Oxford University. He was 'financial journalist of the year' in the UK some 25 years ago for his scoop on the privatization of Russian real estate, the largest privatization of public property in history. You can reach Peter at: dubaijournalist@gmail.com.

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