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What is on the horizon for gold bullion?

*Barron's, by Alan Abelson, December 12, 2011

”LAST WEEK WE PENNED a favorable note about the prospects for gold.  Relax, please.  We have never been nor likely ever will be accused of being a gold bug.  But from time to time, either because sentiment sours noticeably on the yellow metal as it has somewhat of late, or some happening out there in the real world endows it with fresh luster, gold seems a decent addition to portfolios, even those of widows and orphans.

Ornery beast that it is, the market rather contemptuously sent gold lower instead of higher in response to our gracious blessing.  An incorrigible sore loser, we feel obliged to take another look at gold.  And we came to the same conclusion: The precious metal is attractive.

As we explained last week, in a sense it’s paying the price of success.  One of the relatively few holdings in which investors have a nice, fat profit this year —  it’s up over 20% — more than a few of them found it irresistibly tempting to take gains in the metal to offset the losses in less-rewarding plays.
Yet, with the outlook for currencies generally glum as debasement continues apace, bullion and gold equities, to dip into cliched Wall Street lingo, should enjoy a nice tail wind.  Mark Hulbert, a crack contrarian who runs the eponymous Hulbert Financial Digest, wrote in Barron’s back in early July, when gold fetched around $1,500 an ounce, that there was plenty of juice left in the metal.  Sure enough, by late August it had topped $1,900.

Then, the market did a flip-flop (with the emphasis on flop), and by late September gold had fallen to $1,600.  Recently, it has been changing hands a tad over $1,700 an ounce, even though, as Mark points out, the number of bulls has shrunk since early July, and the metal is worth $200 more an ounce than it was then.

And that, Mark says, makes contrarians like himself even more bullish than they were in the summer.  His conclusion: ‘Gold is likely to be higher than today in one month’s time.’  And, conceivably, it might rally for longer than that.

We gave Mark a buzz to try and entice him to be a little more precise and, accommodating as ever, he offered that it might even get up around its highs early next year, with the sensible caution that this is a reasonable possibility, not a hard, fast prediction.”


*This information is solely a highlight of the opinion of a third-party publication and is incomplete.  Please subscribe to this publication for the full and timely opinion of the author and call a Monex Account Representative for any additional up-to-date information. This is not an offer to buy or sell precious metals. Investors should obtain advice based on their own individual circumstances and understand the risk before making any investment decision.

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