Tags: Doug Kass | Gold | Plunge | 25 Percent | 2011

Doug Kass: Gold Will Plunge 25 Percent in 2011

Tuesday, 21 Dec 2010 08:24 AM

Seabreeze Partners' Doug Kass says gold will be highly volatile in 2011, plunging 25 percent.

“I think that gold is going to be one of the worst asset classes of the new year,” Kass told CNBC. “It’s going to display an unprecedented volatility in 2011.”

“I think gold plummets more than $250 an ounce in a four-week period sometime in 2011, routinely moves $75 to $100 a day and briefly trades under $1,050 an ounce, ending the year at roughly between $1,100 and $1,200 an ounce.”

Kass says his view “starts with the observation that gold is a lot like religion.”

“No one can prove that God exists or that God doesn’t exist,” says Kass. “It’s simple. Either you believe in God or you don’t.”

“Well, that’s exactly the way I think it is with gold.”

Gold bugs, Kass observes believe that gold is in finite supply and is more valuable during inflationary and uncertain times, and gold has been a store of value for thousands of years.

However, gold is now viewed as a commodity for all seasons. “Gold has limited industrial value, throws off no income or cash flow and you can’t analyze it with very much precision.”

“It’s subject to wide price swings.”

Kass says he’s also concerned that the SPDR Gold Trust (GLD), the largest gold holder in the world, is heavily concentrated in the hands of hedge-fund managers like (John) Paulson.

“That’s a very slippery slope,” says Kass.

Bloomberg Business Week reports that gold prices rose on concerns about Europe’s debt, with gold for February delivery gaining $6.90 to settle at $1,386.10 an ounce.

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Seabreeze Partners' Doug Kass says gold will be highly volatile in 2011, plunging 25 percent. I think that gold is going to be one of the worst asset classes of the new year, Kass told CNBC. It s going to display an unprecedented volatility in 2011. I think gold...
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2010-24-21
Tuesday, 21 Dec 2010 08:24 AM
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