2012 Gold Price Forecast: Where We Are and Where We’re Going
by Matthew Carr, Investment U Research
Friday, May 18, 2012: Issue #1776
You'll notice that volatility in equities remains ever-present, particularly as we're in the midst of earnings season. But the volatility in gold prices has calmed down.
In 99.9% of instances, I take a bottom-up approach to investing.
I ignore the macro-economic picture for the most part; I ignore the talking heads on television; and I ignore the crests and troughs of sentiment.
I focus on companies. I focus on their opportunities. I focus on value and growth. And then I prey on the “Chicken Littles,” the panic sellers, the investors who freak out on every market dip. I snag great companies at discounts and watch the returns roll in.
This is why my favorite time of the year is August, September and October – the months of broad market catastrophes.
Now, that’s for the vast, vast majority market sectors. One of the few exceptions though, is gold.
Gold is the exact opposite. It’s a top-down investment, with its value tethered to the macro-economic picture. You add to your position on dips – like we have now – and profit on the run-ups.
In August, gold bounced off $1,900 per ounce. Today, we’re hovering around $1,590. That’s nearly a 16% decline… A 16% discount.
A lot of people think the glitter-filled days of new gold highs are behind us. I’ve heard calls for $1,100 gold and even a claim gold will tumble all the way down to $700… But I’d ignore those extremes. I will tell you, we may see gold dip lower – that isn’t out the question.
But a lot of those talking heads forget that gold is also seasonal, though this seasonality isn’t as profound as other, softer commodities.
So the reality is, we’re in a seasonal bearish period inside what I believe is a larger bull run. We’re in stasis – a holding pattern. A breather. We saw this same stall from April to July last year when gold mainly hovered around $1,500 and dipped in the $1,400s a few times.
In fact, over the last 15 years, gold prices weaken from mid-February into the summer, then again in October. And our biggest gains come in the stretch from November to early February – the annual stampede run fed by ramped up Asian buying.
You’ll notice that volatility in equities remains ever-present, particularly as we’re in the midst of earnings season. But the volatility in gold prices has calmed down. Gone are the days of $150 per ounce moves. Now, a big move is between $30 and $40. And most days the moves have been much smaller than that.
November and December are two of the strongest months for gold. But this year we also have the U.S. presidential election in November. And the macro-economic picture continues to remain tenuous. We’re still concerned about Europe. Greece is small potatoes compared to what’s unraveling in Spain. And Spain is a drop in the bucket compared to Italy.
If the dominoes begin falling, the great euro experiment’s end will move from a fun over-dinner debate to a very real possibility.
I expect it’ll be six months before the next big leg up in gold’s price. And $2,000 gold is far more eminent than triple-digit gold. Pick your spots over the next six months, and look for gold to move higher in the last half of the year. Of course, at the very least, you should have Investment U’s recommended 5% allocation in precious metals like gold.
Good Investing,
Matthew Carr
2012 Gold Price Forecast: Where We Are and Where We're Going,Any investment contains risk. Please see our disclaimer.
10 Responses to “2012 Gold Price Forecast: Where We Are and Where We’re Going”
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I see a bounce earlier simply the central banks Are moving in and china is dumping notes for gold.
This spells up soon so does Europe when they start printing in august.
Get ready to rumble on juniors too.
Your article is quite vague, no definition.
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Thank you for your good artical covering gold.
CHEERS Leonard
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I deeply respect your precise analysis. Nevertheless it is quite confusing that some major forecasting teams have predicted a fall in golden months for gold, for instance: http://www.forecasts.org/gold.htm
I will be grateful if you could possibly determine whether they are wrong or right?
thank you very much
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Those forecasts are from the shills of the Gold Bears… Fairly simple. AND I’m not a conspiracy nut, at least not until lately
Knowing the PM fundamentals, common supply & demand functions, and watching the markets several times DAILY tends to tip one off to the market’s quirks, and in many cases MANIPULATION is the _only_ answer.
Not always, just sometimes. I usually make the call before I get the emails and news reports…
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…to wit, the COMEX raised margins from 14% to 18% (a few weeks ago) and prices FELL, after a flurry of paper trades to make it look like a selloff…
The usual suspects in the media even predicted a price increase!
SILVER LINING: Slammed prices equals a buying opportunity
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I moved my pension to a SIPP last year letting the experts manage a section of my investments which were to be a little safer. My quarterly statement to my horror showed a loss. So, I was thinking I should pay a penalty to come out of their across the board equities, bonds,etc and to take charge myself. What I would ideally like to do would be to buy silver bullion as I’m not interested in ETF’s and would only want the physical and this is not allowed, so this leaves physical gold bullion. I am thinking that I will retire in 7-8 years. The question is can I do better than the professionals that take their cut of one per cent? I am thinking by the time the european fiasco has played itself out and we have one or more countries going back to their original currencies, or we have a two tier euro and the US dollar is not the world reserve currency any more silver and gold will be considerably higher than today.
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When are we going on the Gold Standard&
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I am totally confused on what to invest in.
Recently sold my home for $250k.Is currently sitting in tha bank,invest 5-10% n gold silver buillion,miners,oil & gas companies,coins,ETFs?And who is a reliable brokerage co. to invest this money with?Appreciate any pos.replies and thanks for the help.
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i think the most reliable investment is gold!! be sure about it, it has no risks.
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I have some gold and silver bullion. While I don`t intend to sell any time soon I amm not sure where or how to sell when the time comes. Do you have any suggestions.
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