Bear Roubini Sees $1,000 Gold by 2015

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#1
BY FRIK ELS JUNE 03, 2013
http://ycharts.com/analysis/story/bear_r...ld_by_2015

Nouriel Roubini is often, somewhat unkindly, referred to as Dr. Doom (or 'Permabear') because of the many pessimistic economic predictions he's made in the past.

But ever since he accurately forecast the 2008 global financial crisis sparked by U.S. sub-prime lending, people have tended to listen to the NYU’s Stern School of Business professor and IMF, World Bank and U.S. Fed economist.

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Roubini, who now heads his own global economics consulting business, in an article titled After the Gold Rush takes a swipe at gold bugs, whom he describes as "a combination of paranoid investors and others with a fear-based political agenda."

Roubini lists at Project Syndicate six reasons why the gold bubble burst and "why gold prices are likely to move much lower, toward $1,000 by 2015":

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• Gold spikes during serious crises, but even when it is "metaphorically the time to stock your bunker with guns, ammunition, canned food, and gold bars," bullion can still correct sharply as has now happened and falls are usually exaggerated by margin calls.

• Gold performs well when the risk of runaway inflation is high, but "even though successive rounds of “quantitative easing” have doubled, or even tripled, the money supply in most advanced economies – global inflation is actually low and falling further."

• Unlike equities, bonds or real estate, gold does not provide any income and with the global economy recovering, investors are rotating into these asset classes.

• Gold was boosted as QE pushed inflation adjusted interest rates into negative territory, but real interest rates are now rising and hurting gold.

• Even though its reserves are tiny, threats by Cyprus to sell its gold panicked the market in April. Other governments struggling with debt like Italy may be tempted to do the same and since it has $130 billion worth of gold, it could really move the market down.

• "Extreme political conservatives, especially in the United States, hyped gold in ways that ended up being counterproductive," and the far-right arguments about currency debasement, a return to the gold standard and hyperinflation "cannot be sustained."

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Gold mining stocks -- such as Barrick Gold (ABX), Newmont Mining (NEM), Yamana Gold (AUY), Kinross Gold (KGC) and Goldcorp (GG) -- have fallen more steeply than actual gold prices since the decline began.

Frik Els, a contributing editor at YCharts, is an editor at www.MINING.com. He can be reached at editor@ycharts.com. For a demonstration of YCharts Platinum, go to http://ycharts.com/info/pro_platinum.
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#2
My estimate for the gold ETF will be ultimately be 2 digits around USD 97 or within the 90's range if you correlate that to the physical market it will be around 1000-1100 in price. (There I've finally said it Tongue)

How long it stays that way I don't have a crystal ball but have 2 likely scenarios.

It could hit bottom do a series of small rallies and corrections before really rebounding and retrace back to 1700 target time is within 1 year.

or

it could drop to 112 on the gold ETF move sideways for a few years the lowest price could be USD 92-97 then after a few years it could rebound Big Grin

I think more likely the second scenario will happen.

I'm in no hurry to buy gold and we haven't seen the last of this correction yet, the fed is out to destroy gold if you hold gold it's going to be toast! Tongue

The world is running out of oil buy energy related stocks instead. Big Grin
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#3
Seems to me Roubini and Soros are usually right or at least leaning in the right direction...

I would think main reason of low inflation despite printing cash is US now is both having depression and deflation like long time back. Stimulus only masks over the economic problems temporarily. Any inflation is mitigated by background deflation.

As per Buffett, gold is a non-productive asset. So for us value investors GOLD is of no interest. Unless a gold refinery/producer/mining company is trading way below its NAV Big Grin
Virtual currencies are worth virtually nothing.
http://thebluefund.blogspot.com
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#4
Roubini is a broken clock that is perma bear. So he will be right some of the time/or eventually but not useful to actually making money. Basically the same type of forecaster as Jim Cramer.

Soros is a different ballgame and he has a bottomline at stake. He changes his view/posn when the world changes around him.
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#5
From Warren Buffett's 2011 Berkshire Hathaway letter to shareholders

Quote:Today the world’s gold stock is about 170,000 metric tons. If all of this gold were melded together, it would form a cube of about 68 feet per side. (Picture it fitting comfortably within a baseball infield.) At $1,750 per ounce – gold’s price as I write this – its value would be $9.6 trillion

Quote:You can fondle the cube, but it will not respond.

Big Grin
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