GOLD AND SILVER ANALYSIS - $3400 Gold - pipe dream or possibility?
by Lawrence Williams
Date: September 19, 2007
A prediction of $3400 dollar gold within three years should not be discarded as impossible, although hopefully unlikely.
A prediction of $3400 dollar gold within three years should not be discarded as impossible, although hopefully unlikely.
A short article in today's Times newspaper in the UK recounts that Christopher Wood, chief strategist at big Hong Kong broker CLSA (whose largest shareholder is France's Credit Agricole, the world's 7th largest bank by asset value) feels that "market ructions and a collapse of the dollar could send gold prices to $3,400 an ounce or more in the next three years."
Is this just a euphoric statement by someone carried away as the gold price strengthens above the $700 mark, or worthy of serious consideration?
Somewhat frighteningly, perhaps the 'serious consideration' scenario definitely wins out here. $3,400 an ounce is a little less than five times the current gold price level - and price gains of this magnitude have been seen in the base metals and uranium sector over the past three to four years.
Admittedly gold is a different animal from the industrial metals where prices have risen on unprecedented demand from countries like China, which had not been predicted and caught the mining sector short. But, Wood argues, as reported in The Times, the scenario could be that investors will soon realise that the subprime crisis is just a currently-visible part of a much wider financial breakdown... Whether the Central Banks will sit back and let this happen is actually unlikely, but the argument is that if enough momentum is gathered the Central Banks will be unable to stop it. .. I certainly wouldn't rule out $1,000 gold in that period. Plenty of far more experienced observers than myself would agree with this - not least Pierre Lassonde, former President of Newmont.
The above information has been redacted from the article as it originally appeared on Mineweb.com on September 19, 2007.
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