Gold: Wait For the Bottom

If you’re watching spot gold today, I hope you’re sitting down. The dizzying price fluctuations over the last few days seem to be continuing, with spot reaching $1,259 today after having crashed to a three-year low of $1,180 just last week.

It’s gone back up as eager investors buy the dips. While gold is certainly a bargain right now compared to last year when it hovered in the $1,600 range, you may want to hold off buying until it bottoms.

When that will occur is a huge question. It’s always good to check in with the pros.

“I am not convinced this is the bottom,” Investment legend Jim Rogers said at an event in Singapore recently. “Where that bottom will be I have no idea. Perhaps it will be $900-$1,000.”

Economist Nouriel Roubini is predicting a fall to around $1,000, citing low inflation risks and rising real interest rates.

Forbes analyst Augustino Fontevicchia suggested a few days ago gold might fall to $1,000 if it “breaks through key levels of resistance that are fast approaching.”

Goldman Sachs sees gold bottoming out around $1,050 next year, after having dramatically shifted its previously bullish position early this year.

Our own chart reader, Greg Guenthner, is forecasting $1,100 gold for the forseeable future. Greg was predicting gold would get hammered this year as far back as February. On April 9, he noted, “the gold cycle is turning. Avoid the ETFs and miners. If you own them, get out now. These will be the most vulnerable investments as the drop approaches.”

The big drop came on April 15… but more was to come. “The drama is just beginning,” Greg predicted on April 29, shortly after gold fell to $1,321 and snapped back to over $1,470. “Big money is lining up to bet on lower prices — all while small investors embark on a massive buying spree.” Since then, gold has reached lows not seen in three years.

Keep an eye on that price. Now may not be the best time to rush back in.

Jason Farrell

For The Daily Reckoning

P.S. You can read more of Greg’s forecasts in his Rude Awakening email updates by subscribing to The Daily Reckoning. Just click here!

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