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After hitting an all-time record high, the price of gold edged back down Thursday. Precious metals analysts are blowing off the break as little more than a bit of profit-taking or a short breather before gold prices continue their upward climb on fear and uncertainty in the markets, which has been pushing investors into safe-haven assets.
By Melissa Pistilli—Exclusive to Gold Investing News
Precious metals analysts are blowing off the break as little more than a bit of profit-taking or a short breather before gold prices continue their upward climb on fear and uncertainty in the markets, which has been pushing investors into safe-haven assets.
Wednesday, gold futures for June hit a record $1243.10 an ounce in New York as confidence in the euro zone weakened further. Gold has never been this high in the nearly four decades since gold futures began trading.
This most recent frenzied gold buying trend is in reaction to the ongoing and seemingly worsening debt situation in Europe, particularly out of Greece, Portugal and Spain. The euro is now at a 14-month low against the greenback. Problems in the UK and indications of a bear market in China are adding to a wider fear over global economic uncertainty.
“Gold is going up because there is a real concern about monetary debasement,” said Dundee Wealth economist, Martin Murenbeeld.
Gold prices have traditionally held an inverse relationship to the US dollar; however, in the past few weeks gold has moved up alongside of the dollar. “What is bullish for gold is the coincident dollar strength. Similar to that in late 2008 and early 2009 after Lehman’s bankruptcy — a period of heightened risk aversion,” said Dan Brebner, Deutsche Bank analyst.
Gold at $1500, $2000 or even $5000 an ounce?
Where’s gold going from here? Well, if you’re amongst the GATA gold-bug, the-sky-is-falling-crowd, gold’s on its way to $2,000, $3,000, maybe even $5,000 an ounce. If you’re a bear from way back, gold’s on the cusp of a bubble about to burst, sending it reeling down below $800 an ounce.
For those looking for a more realistic forecast, $1500 an ounce may be in the cards, while $1300 or $1400 in the short term is not entirely out of the question.
“It’s tough to see gold replicating the massive run it’s already had, or even to really see it climbing to the $2,000 an ounce level many gold bugs think it can achieve. But it’s a lot closer to $1,400 or $1,500 than to $300 given the current worldwide economic conditions,” writes Market Watch editor-in-chief, David Callaway. “The markets were jolted in the past few weeks in a way that will take some time for the scare to be over, likely the next two months. More scares from Europe or with unforeseen debt skirmishes elsewhere could spark gold certainly into the 1,300s, and maybe higher.”
Others agree:
“Gold analysts polled by Bloomberg believe that gold could reach $1500 per ounce in the coming months,” says the GoldCore Bullion Services Team. “Gold may extend gains to a record $1,500 an ounce this year as investors seek an alternative to currencies amid the European sovereign-debt crisis.” — FXstreet.com
“It’s going to be volatile, we’re going to have some wild swings, but gold is not going too far too fast. We’re in a steady build in prices.” Gold is becoming an international currency and has benefitted from a weaker euro, a trend not expected to change, he added. Gold will push beyond $1,300 in the short term, said Frank Lesh, a broker and futures analyst with FuturePath Trading in Chicago. — Market Watch
For now, the futures of both Europe’s economic health and gold’s price have become intertwined. The yellow metal’s traditional role as a safe-haven asset and a hedge against inflation is really coming to the forefront in this region of the world.
The Wall Street Journal’s Neil Shah recently explored the risk of rising inflation “brewing” in Europe. Shah’s piece, “Europe’s Newest Risk: Inflation,” is a must read for serious gold investors.
Company News
Levon Resources Ltd.(TSX.V:LVN) announced today the latest assay results for an additional 11 holes in its Phase 2 drill program at the Cordero silver, gold, zinc, lead porphyry district located 35 kilometres northeast of Hidalgo Del Parral, Chihuahua, Mexico.
Highlights from the results include returns of 114 m grading 126 g/T silver, 0.485 g/T gold, 0.93 percent Zinc, 2.18 percent lead, including a newly discovered, higher grade limestone replacement (manto) type mineralization of 26 m grading 410.1 g/T silver, 1.057 g/T gold, 2.92 percent zinc, and 7.06 percent lead.
Further work on the property continues this week with Aeroquest preparing to fly a combined airborne magnetic, EM, and radiometric survey to cover the entire Cordero Porphyry Belt.
“With our continuing drill success, we intend to accelerate the programs as long as the drill results warrant, in order torealize the full discovery potential of the Cordero Porphyry Belt we are defining. In large bulk tonnage systems like Penasquito, which we believe is directly analogous, the mineralized geology should meet or exceed expectations and the test of the drill,” said Levon Resources President and CEO, Ron Tremblay.
“Our immediate goal is to find additional outlying mineralization similar to the Pozo de Plata Diatreme discovery in diatreme complexes we have identified in Dos Mil Diez and the Molena de Viento Caldera Diatreme Complex that require offset grid drilling. We now know Cordero is a strong mineralized system and we need to see how far it goes, particularly to the southwest,” added Levon’s VP of Exploration, Vic Chevillon.
In addition to the Cordero project, Levon also holds the Las Mesas gold-silver-lead-zinc project in Durango, Mexico; the Norma Sass and Ruf claims located near Barrick Gold’s Pipeline gold deposit in Nevada; as well as key land positions at Congress, BRX, and Wayside in the productive Bralorne Gold camp of British Columbia, Canada.