Cheerleading for Gold Won't Make it Go Up

For years the gold bulls have been predicting that gold will reach new highs as the U.S. dollar weakens, inflation heats up, stocks tumble and investors seek a safe haven. Gold traded above $1000 in March, 2008 (chart), but since then it has fallen back to around $720. Where is gold headed from here? Here are some predictions and thoughts from six gold proponents.

Peter Schiff, author of Crash Proof: How to Profit From the Coming Economic Collapse, said on Fox Business News (May 7, 2008) that gold was headed to $2,000 in 2009 and $5,000 in five years. Schiff has made his career recommending gold as an alternative to U.S. stocks.

Christopher Wyke, a product manager at Schroder Investment Management Limited (Schroders), predicted that gold would rise to $5,000 an ounce or beyond in the next several years. He was speaking at a June, 2008 press conference to promote Schroder Alternative Solutions Gold and Metals Fund.

Pierre Lassonde, a former president of Newmont Mining, stated in a September 20, 2008 interview with Gold Report that "A panic effect could push it (gold) to $4,000 or $5,000." Lassonde has been associated with the gold mining business for years.

Robert McEwen, chairman of US Gold and former chairman of Gold Corp, said on Bloomberg, CNBC and BNN that gold would be "north" of $2,000 in 2010.

James Turk of GoldMoney, a company that promotes owning physical gold, stated on Fox Business News (Jan 7, 2008) that gold would be in the four digits in 2008 as the dollar weakens.

In 2004, Curtis Hesler predicted in Gold: $2,000 An Ounce Or Bust that a weak dollar would help push gold to $2,000 or higher. Hesler runs, Professional Timing Service, a subscription-based newsletter all about gold. He now says gold is going to $1,600.

Should we believe their predictions? The prudent investor should realize that these self-appointed gurus can't be totally objective, because they have a vested interest in gold doing well. Not unlike sports fans rooting for their favorite team, these gold bulls are cheerleading for gold to be a winner, but that doesn't mean that it will.

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Tracking Gold and Silver Prices

Posted October 26, 2008.

Cheerleading for Gold Won't Make it Go Up

Cheerleading for Gold Won't Make it Go Up