Sunday, June 26, 2011

Gold to go down next three months or so

Dr Faber says about Gold ‘they will go down over the next three months or so’. He warns: ‘Not to own gold is to trust central banks and that you do not want to do!’

 



His reasoning is apparent from this video from Bloomberg, and he predicted the two-month correction in stock markets correctly. Now he is seeing a three-month continuation of this sell-off including gold and silver.

ArabianMoney does not have a crystal ball, although last December we did say to buy silver because there would be a $50 spike early in 2011 (click here) and we maintain that silver will be the best performing major asset class over the whole of 2011 (click here). Silver should close the year substantially up on that $50 spike.

QE3?

Marc Faber thinks Ben Bernanke will wait until later in the year before starting to print money again and that will push precious metal prices back up again. This fits with the recent ArabianMoney column suggesting that a sell-off in stock markets will last until a climactic sell-off in late October (click here).

Last week US stocks closed slightly lower again and the yield on treasuries hit a new low. That pushed up the value of the US dollar and pulled precious metal prices down. Silver fell to $34 and gold dipped below $1,500 an ounce.

If this trend is extrapolated for the next three months then the S&P 500 could well be down 20 per cent or more. But we doubt whether gold will go much below $1,450 and silver $30 an ounce as the investment demand remains from those positioning for renewed dollar weakness when the Fed resumes its money printing as it must for an election year.

 

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