In a word: sure. But much depends on the strength of the dollar, physical demand out of Asia and any new crises that may develop.
The forecast for gold to return to seeing a “two” as the front number in 2012 is shared by several investment banks. Morgan Stanley, TD Securities, Bank of America-Merrill Lynch and SEB Merchant Banking are among some of the banks who see gold either averaging above $2,000 or at least trading to that level at some time during next year.
Based on gold prices around $1,600, a move to $2,000 would be about a 23% rise.
Leibovit said he sees inflation coming down the road, the question is, “when does it kick in?” Gold could continue to weaken into January, but he said gold investors need to consider a longer term view than six months or even a year. They should be taking at least a three to five year perspective.
Tom Winmill, portfolio manager of the Midas Fund, said there’s a good chance for gold to see another strong year.
“It’s very possible that it can be very strong year after year after year. We think the key component to gold is that it’s denominated in dollars. How high it can go will be dependent on how much money is created. With the two QEs, $2.2 trillion was created. There will be more money created down the road…. We (the U.S.) will be adding more money because we are borrowing. The borrowing represents the future creation of new money,” he said.
For 2012, Winmill is forecasting $1,950 by the end of the year, with a high of $2,200 and a low of $1,650.
The low interest rate environment is important to the gold outlook, Winmill said. “You can’t view rates in a vacuum – at Midas we view inflation rate next to the real yield…. The two-year bonds yield is 25 basis points. The 12 month CPI is (3.2%), so the negative real rate is (3%). That is destroying savings. Our view is as people become more aware of the destruction of wealth they will there will be a stampede into hard assets – gold, diamonds, real estate,” he said.
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