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Rob McEwen sees $5,000 gold

Rob McEwen, who can almost be called a living legend in the gold mining industry, says gold prices may reach $5,000 an ounce – and as soon as 2012 but maybe not until 2014.  McEwen sees loss of faith in the dollar being the reason for gold’s coming rise.

“Money supply has expanded so rapidly that there are a lot more dollars looking for a steady home,” McEwen said in a Bloomberg Television interview. “Governments cannot help themselves. They want to help the economy. They are printing money. They are going into debt on a horrific scale, and that will depreciate the value of the dollar.”

The coming price rise represents a “once-in-every-300-years” phenomenon, McEwen said. He maintained his previous forecast that gold will rise to $2,000 an ounce by the end of this year.

Such forecasts have been made by numerous newsletter writers and usually can be dismissed as hype.  Often, those predictions come in advertisements for their newsletter.  But, McEwen’s prognostication carries weight.

McEwen invests tens of millions of dollars in his beliefs.  Many of the newsletter writers are trying to make their first million.  Still, there are credentialed newsletter writers who have called for gold prices in the multiple thousands of dollars.

Richard Russell, editor of Dow Theory Letters, has written that before this primary bear market in stocks is over, the Dow and the price of gold will meet.  Basically, Russell expects that somewhere in the future we will see something like 3,000 on the Dow and $3,000 gold, but maybe it will be 4,000 on the Dow and $4,000 gold.  Or, maybe it will be 5,000 on the Dow and $5,000 gold.

Jim Sinclair, not a letter writer but an acclaimed commodities investor, sees $1,650 gold this year.  Not as optimistic as McEwen, but nonetheless a rosy outlook.

Philip Manduca, Head of Investment and Chairman of the Investment Committee for ECU Group (London), sees gold topping $2,000 “before 2010 is out.”

Although gold production has fallen in recent years, that is not the driving force behind gold’s price rise over the last decade.  The reason for gold’s ascent is concern about the dollar—and other fiat currencies for that matter.  Considering Washington’s “solutions” to today’s financial woes, investors have reasons to be concerned about the dollar.

The outlook for gold—and silver—is bright.  Rob McEwen says it is very bright.

3 Responses to “Rob McEwen sees $5,000 gold”

  1. Glenn

    I saw Rob last year at the SF Hard Assets conference and he mentioned the same thing, $5k gold when the current bull market is topped out.

    He also mentioned that one should start lightening up on their position as the Gold/Dow ratio becomes smaller. He believes that it will be 1 to 1 again just like in 1980 when Gold hit $800.

    If Gold is going to peak at $5k, then investors should start lightening up their position when the Dow is at $6k or so as an example.

  2. Bruce W.

    I don’t see the gold price appreciating quite so fast. I expect gold to trade sideways for the next 10 months (much as it has the past several months) before making the next leg higher to $1600.

    Unemployment is headed to 24% by year end. Look for a moratorium on foreclosures coming within 3 months, in an effort to steer the election towards the democrats.

    The government holds most of the paper backing the mortgages, who is to stop them? At that point, interest rates will perk-up.

    When the bond market finally collapses, what little proceeds available to sellers will be rolled into gold. At that point, gold will really take off.

    I won’t even venture an estimate on the price, as the US dollar may well be destroyed completely in the process.


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