Saturday, September 24th, 2016 MST

$900 gold in 2008?

Resourceinvestor.com has posted an interview with Jessica Cross, CEO of Virtual Metals, who says “we’re going to be very surprised if we don’t see $900 an ounce in 2008.” Obviously, $900 gold within twelve months would be another major move. If we do see $900 in 2008, then we have to be ready to accept, sometime, maybe in 2009, a period of consolidation. Still, geopolitical circumstances and concerns about the dollar are such that no one can say when buyers will take a breather.

A couple of more interesting points about the interview are in order. First, many U.S. investors may not be familiar with Virtual Metals, but resouceinvestor.com says that Virtual Metals, based in the UK, is “. . . probably the world’s most respected precious metals . . . agency.” So, Cross’ observations should be of interest to gold and silver investors.

Second, Cross says that surge of recyclable metals that usually comes with a sharp price increase is not happening this time. Recyclable metals are a major source of gold for refineries, but gold is not coming in as expected, which means less gold coming out of the refineries.

Third, Cross says this about silver: “. . . silver will sort of be somnolent for a while, and then suddenly it kind of erupts into life, and the percentage price moves then make everybody’s jaw drop. It can happen, there’s no doubt.” At CMIGS, we are not concerned about silver’s failure to keep step with gold.

When silver makes its move, it will do so in a dramatic manner, such as the late 2005 through May 2006 when silver tacked on a 75% gain in about seven months. We continue to think that silver will outpace gold before this precious metals bull market is over.

Finally, Cross points out that the Fed is usually accommodating during election years, which means lower interest rates and increased “liquidity,” via the Fed’s printing presses, which is inflationary.

It’s the right climate to own gold and silver.