Soon GOLD AT 1000?

A recession in the US or a mere slowdown? That is the question of the most recent days. For a while now I, and many of my colleagues, have been bear believers. The bears have woken from their hibernation and are back with a vengeance!

The truth of the matter is that the optimists are saying that we need not worry as companies are still reporting profitability. While this is a good and valid argument, it does not take into account the fact that there is a time lag until various companies start showing the true picture of the economy. I believe that the results from Q2 onwards will start to become gradually worse.

The other aspect is that we have not had a large enough decline to have a sufficient bottom for a bear market. I would guess that we are about half way down or perhaps just before half way.

When Gold hit 900 for the first time, I was of the opinion that it was overbought and that a small correction would take place. Then later, I went into work when the price had fallen to about 850 and said to my colleagues, today is a good day to long gold… and sure enough, it was the day it went to almost 900 again. I think that the gold price will almost certainly break through the 1000 barrier soon. I also believe that the long-term investor should understand that the price will return to the 500 to 600 mark in the next 5 to 7 years. If you look at the charts, this is what they show. I would say that silver is a bit different but it would be safe to assume that it will reach near 20 over the next few months. Oil will most probably return to the 100 mark and trade in this range going forward.

Lastly, this seems like the opportune moment to short the market. Whether you choose to short the DAX, the S&P500 or the MSCI, it does not really matter that much.
Until next time!