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Our forecast of much higher gold prices depends not one iota on the day-to-day ups and downs, no matter how extreme, in the yellow metal’s price. Instead, the average long-term price is entirely a function of world economic and political developments, which affect the intensity of investor interest (what we might call long-term hoarding demand) and on gold’s own supply/demand fundamentals. [Let me explain further.] Words: 500
So says Jeffrey Nichols (www.nicholsongold.com) in edited excerpts from his original article* which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has further edited below for length and clarity – see Editor’s Note at the bottom of the page. (This paragraph must be included in any article re-posting to avoid copyright infringement.)
Nichols goes on to say, in part:
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At the risk of sounding repetitious, we think gold’s long-term price determinants are unequivocally bullish. Very briefly, here are six reasons why I see much higher gold prices for years to come:
- Further monetary easing by the world’s top central banks – the U.S. Federal Reserve (the Fed), the European Central Bank (the ECB), the Bank of England, the Swiss National Bank, and the People’s Bank of China (the PBOC) – is likely as global economic activity and employment remain unacceptably depressed.
- Central bank interest will not only continue but will likely expand in 2012 – with China and Russia leading the pack, joined by a growing number of central banks underweighted in gold and over weighted dollars and euros. The official sector continues to underpin the price, buying on dips – and willing to absorb however many ounces and tons are available to them without disrupting the market. In fact, it is likely that central banks took advantage of this week’s bargain-basement price to accumulate gold.
- Long-term demand from investors and jewelry buyers in both China and India will continue to boost gold prices quite significantly – not just in the next year or two, but for many years to come – reflecting the rising incomes and growing middle classes in these two countries.
- Persistent Middle East tensions – with saber-rattling by Iran, oil-price uncertainties, civil war in Syria, growing unrest in one or another country, and the spread of Islamic fundamentalism.
- Europe’s continuing sovereign-debt crisis, further downgrades by the credit-rating agencies, the still-likely Greek default and departure from the euro-zone, possibly followed by other deeply indebted European countries and, importantly,
- the loss of purchasing power and devaluation of the old industrial world’s major currencies (the U.S. dollar, the euro, the British pound and even the Swiss franc) and the ascendency of the Chinese yuan along with the currencies of some other newly industrialized nations.
Conclusion
Just where the gold price is heading in the days and weeks ahead is truly anyone’s guess – but I feel confident that over the next few years gold will achieve rarified heights – with $3,000, $4,000, and possibly even $5,000 an ounce more than likely.
*http://nicholsongold.com/2012/03/opportunity-knocks-a-quick-note-on-recent-gold-price-action/
Editor’s Note: The above article has been has edited ([ ]), abridged, and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.
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