Gold to $2,000 This Year Despite 'Manic' Crash

Posted by - Thursday, March 1st, 2012

Yesterday, gold futures feel as much as $100 as Ben Bernanke and the Federal Reserved hinted that they will unlikely initiate a third round of quantitative easing in order to stimulate America's uncertain economy.

Fed Chairman Ben Bernanke spoke in his semi-annual report on monetary policy to the House Financial Services Committee in Washington. In his speech, Mr. Bernanke indicated that the Fed was not committed to taking any immediate action regarding offering more monetary stimulus.

On account of his words, gold futures on the Comex fell a solid five percent down to $1,698 at 5:14 p.m. yesterday afternoon; falling by $90.30.

However, gold and silver investors shouldn't be overly concerned just yet. Gold is still in a relatively safe place and analysts speculate on a gold hike to at least $2,000 this year despite the precious metals price crash this week. Within five years, gold could hike all the way up to $3,600:

"There is a possibility of breaching $2,000 per ounce of gold in a momentum spike," says Jeff Wright, managing director and senior research analyst at GHS, "which we believe would be for a limited amount of time due to profit taking, increases in physical supply and futures exchange intervention" such as margin hikes.

"People get so caught up with the next three minutes for gold and they should really be focused on the next three years," says Frank Holmes, CEO of U.S. Global Investors. "Does anyone really believe in the long term strength of the U.S. dollar ... We're just going to have to live with this volatility for another 12 months," says Holmes, who still thinks gold price could double to $3,600 an ounce in 5 years.

Bullish bets on gold made evident from observing record gold holdings, surging gold coin sales, and hedge fund predictions confirm that gold is still positioned to rise.

As oil – and therefore gasoline – prices continue to escalate urging along an accelerating inflation rate, wise gold investors remain bullish regardless of yesterday's price slumps.

According to Mineweb:

Our description of the Gold tsunami wave to come this year as a result of the huge wave of Dollar Inflation initiated by the $600 Billion US Dollars sent to Europe back in December of 2011 is beginning to be noticed by the markets. This is a very important "point of recognition." 

Moreover, the source suggests that hyper-inflation could push gold to astronomical levels after this large run in gold corrects...$10,000 to $12,000 ranges have been discussed by some exuberant analysts.

While the dollar consistently devaluates against the more constant value of gold, gold could easily hit parabolic heights. As a rule-of-thumb, gold nearly always moves inversely in comparison to the value of the dollar.

The gold experts confidently address the recent sharp drops in gold and silver prices stating, This reaction changes nothing important in terms of the underlying fundamentals at hand, nor the intermediate-term technical picture.”

gold
*Image courtesy of Mineweb.com.

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