| My Broad Gold Forecast: The Yellow Metal Is Going to at Least $2,435 an Ounce. My next target on gold is $1,450 an ounce, but I don't think we're stopping there. In fact, the next big phase of gold's bull run could bring us to $2,435 an ounce. That would be equal to gold's old, 1980 high of $873 an ounce adjusted for inflation. That goal is easily achievable. But the world has changed since 1980, and there are forces in play that could send gold much, much higher. Just to name three ... #1) Central Banks Have Switched from Net Sellers to Net Buyers of Gold. The latest info from GFMS says central banks could be net buyers of gold by about 15 tonnes of bullion this year. That hasn't happened in decades. #2) Mining Costs Are Rising. The average gold production cash cost was $558 per ounce in the second quarter of 2010. That's up from $544 the previous quarter and $453 an ounce a year before that. Rising costs put upward pressure on prices. #3) Gold ETFs Are Buying Hand Over Fist. In 2010 alone, GLD, the largest of the gold ETFs, has added $7 BILLION worth of the yellow metal to its holdings. This is an enormous and growing new force on the market.
Of course, it's not just gold. You also have to be aware of the enormous potential in silver ... My Broad Silver Forecast: It Will Test $50 an Ounce. That's right, I think silver will more than DOUBLE in price, to its old high of $49.50 set in January, 1980. From recent prices, that would be like gold going to $3,064 an ounce! Why? Here are just three of the forces I'm watching in silver ... #1) Surging industrial demand. Silver is not only a monetary metal, it is an industrial metal. It is used for small electronics, flat-screen TVs, mirrors and more. Approximately 700 tons of silver are in chemical reactions to produce plastics. And demand for silver from the industrial growth engine of the world — China — is soaring. Net imports of silver into China quadrupled in the first seven months of 2010. #2) Limited supply. Much of the world's silver comes as a byproduct or co-product of other metals (lead, zinc, copper, and gold). That means the world's silver supply is dependent on base metal production. Only about 30 percent of total silver-mine output is from primary production — that is from mines that are primarily silver producers — where mine exploration, development, and production decisions depend on the metal's own price.
Another 13% comes as a co-product of gold. And 57% is as a byproduct of lead, zinc and copper. That means the price of silver has little influence on mine economics and decisions to invest in exploration and development. #3) Above-ground stockpiles shrink while demand picks up. The world consumes about 888 million ounces of silver annually through industrial products and processes, but only produces 680 million of that from mines. The rest comes from scrap and government sales. And demand has accelerated while mine supply remains mostly stable. This has put a perilous downward trend in the number of months that above-ground bullion can cover ... Much of the above-ground inventory is in silver ETFs. While that inventory CAN be sold, it's not likely to be sold unless investors run for the exits — an unlikely event when silver prices are marching higher. Put it all together and I think silver is going back to its 1980 high — and possibly much higher. And if you think the rise we've seen in gold and silver is big, just wait till next year! By 2011, we could see an all-out feeding frenzy. And smart investors like you who see that crunch coming, pick the right stocks, and invest in them prudently, should profit immensely. Now, I think we're entering the stage of the market where silver could outperform. So the balance of my new picks are in silver.
Platinum: The 'Secret' Precious Metal That Wall Street Is Ignoring Wall Street is finally waking up from its slumber and noticing gold and silver ... and sending the prices of those metals soaring. And yet, there is another metal that is in very tight supply, yet Wall Street is ignoring the brewing crisis in its supply line. When this supply squeeze finally grabs headlines, this metal could BLAST right off the launch pad! Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints. Nothing in this article is, or should be construed as, investment advice. |
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