Thursday, March 12, 2009

Today in Gold: Thursday, March 12

Each weekday, Cash4Gold will troll through the web's gold banter and post some of the bigger or more interesting stories. Following is a run-down of today's features:

"Gold Rises for Second Day on Demand for Haven; Silver Climbs "
Author: Pham-Duy Nguyen

Main Points: Gold for April delivery rose $13.30 to $924 today, a day after rising 1.7%. Despite the rebound, some experts expect the recession to harm the value of gold.

"The reality is that the combination of high prices and the effects of the credit crunch encourages people to sell precious items they already own," said Jon Nadler, an analyst at Kitco Inc. in Montreal.

Analysis: Exactly. It's supply and demand. During these difficult times, those owning gold are more likely to sell in order to hit margins. Just as ordinary Americans hoping to pay their bills are sending in their unwanted jewelry to Cash4Gold.

And more evidence that no one is all that sure about the future of the price of gold:

"Newmont CEO sees gold in range of $1,200"
Author: Steve James

Main Points: Richard O'Brien told Reuters that he expects gold trading to remain in a range between $900 and $1,200 per ounce over the next few years.

"I will be surprised to see gold on average below $900 this year," O'Brien said. "If you take the highest gold price in the 80's and escalate it into today's dollars, you get a number around $2,000 an ounce.

"I don't see that particular number as being out there, but there is clearly upward mobility...and I do think we're in a trading range of $900 to $1,100 or $1,200 over the next several years."

"Numis increases 2009 Gold Price forecast - Thursday 12th March 2009"
Author: Goldbug

Main Points: Numis Securities raised its 2009 gold forecast from $700 to $900.

According to Numis: "The massive global monetary and fiscal stimuli, including US and UK quantitative easing, may result in a shift from a potentially deflationary environment to an inflationary one."

Analysis: I list these together to emphasize that there is far from a consensus when it comes to the future price of gold. We have also seen others project $1,500 or even $2,000 in the coming years.

Granted, O'Brien isn't exactly unbiased as a mining CEO to make an aggressive projection, but the numbers are across the board. I also find it interesting that Numis would change their 2009 projection after two months of trading.

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