Rising gold price a "virtual certainty" - Adrian Day

Adrian Day and Martin Murenbeeld are positive on gold at the New York Hard Assets Investment meeting, but conservative on their growth estimates. Ian McAvity warned the audience to be careful what they wished for.

NEW YORK  - 

In separate talks to the New York Hard Assets meeting analysts Adrian Day and Martin Murenbeeld concurred in many aspects on their view of where the gold price was likely to go in the short to medium term and both were positive, but not inordinately so. 

Day chose to compare the current global financial recession with the Great Depression and with Japan's more recent problems, pointing out that recovery in each case took many years not months. 

He felt that monetary authorities have little idea of what they are doing and that measures to bring the world out of recession are experimental at best.  At least the Europeans have a plan, he said, but they don't know where to find it! 

The crux of Day's talk was that we are indeed in for a period of long and protracted economic weakness, and in such circumstances there were two of what he called virtual certainties ahead.  The first was that the US dollar would lose purchasing power and the second was that the price of gold will rise - not necessarily sharply, or immediately, but over a two- to three- to five-year period. 

Martin Murenbeeld of Dundee Wealth Economics--who has a pretty good track record on gold price forecasting in recent years--largely concurred, despite noting that recession was generally bad for gold.  But in the current environment the bull points for the yellow metal outweighed the bearish ones, with policies which had not been with us before - like quantitative easing - being very positive. 

Looking at gold's cyclical pattern, with cycles generally lasting ten years, he felt that gold would reach $2300 at some stage in the current cycle, but this might still be some way ahead.  In the near term the weighted average of his price predictions were for an average price this year of $952, $1005 next year and $1058 in 2011. 

Speaking earlier in the day, Ian McAvity, who edits the Deliberations newsletter and is very much a technical analyst, pointed out that if gold followed the 1980 peak pattern in real terms it would hit $5400 an ounce in 2011.  But he, commented, this was an observation, not a prediction - although not beyond the bounds of possibility.  He further warned his largely pro-gold audience to be careful what they wished for.  The circumstances which could bring gold to this kind of level would not be pleasant!

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responses to this article

Fiat Money Gold is the only metal keeping us from hyper inflation.Review Ludwig Von Mises books.He should have convinced everyone there is no other way to get around fiat money then tieing it to gold. Wake up America. by Ara J. Horasanian on May 13 2009, 12:25 Find this comment inappropriate? Report it

Gold I am no expert like GFMS, but these people seem to be BANKERS in disguise. by Bill m on May 13 2009, 22:55 Find this comment inappropriate? Report it

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