Tags: Taylor | Gold | Bull | Market

Metals Expert Jay Taylor: Gold in a ‘Bull Market of a Lifetime’

By    |   Thursday, 13 Sep 2012 08:01 AM

Gold prices might have slid in the last year, but overall, the precious metal still is moving ahead in a rally of a lifetime, said Jay Taylor, president of Taylor Hard Money Advisors and editor of Miningstocks.com.

Gold prices are about $200 off from the record highs of $1923.70 hit in September of last year, thanks mainly to the European debt crisis that sent investors racing to the safety of the U.S. dollar and Treasury, which are large and liquid markets that offer plenty of safe harbor despite paltry returns.

Over the longer term, gold has soared above the $300 per ounce prices of a just over a decade ago, and the metal has room to rise provided the economy doesn’t get blindsided and send investors scrambling to the dollar.

“If the policymakers globally can hold things together and we don’t have another Lehman Brothers type of credit implosion, then I think gold could be off toward much, much higher levels. I think that we could easily see $2,000 by the end of this year,” Taylor told Newsmax.TV in an exclusive interview.

Watch our exclusive video. Story continues below.



One way to track gold’s progress in a bull market is to compare the yellow metal’s monthly average price with its 20-month moving average price.

When the monthly price corrects to the point that it matches its 20-month moving average, the metal ends its correction and resumes its gains — it has done just that roughly eight times since the current bull market began in 2002, according to Taylor.

“We recently saw that happen for a couple of months in a row, and now it looks like gold is taking off again well above its 20-month moving average,” Taylor said.

Central bank policies are stoking the rally as well, especially Federal Reserve stimulus measures in the United States.

Editor's Note: Get David Skarica's Gold Stock Adviser — Click Here Now!

“I think we are in the bull market of a lifetime for gold, and that’s not because gold has become any more valuable. What is happening is the currencies are being trashed by the policymakers, by the central bankers, if you will. It’s not that gold is worth more, it’s just because paper is becoming worth less.”

To prop up the economy since the 2008 financial meltdown, the Federal Reserve has carried out two rounds of quantitative easing (QE), under which the Fed bought bonds including Treasury holdings and mortgage-backed securities held by banks, pumping more than $2.3 trillion into the economy, fresh liquidity that sought to spur investing and recovery during the process.

The Fed has also slashed benchmark interest rates to near zero percent and rolled out other measures to kick-start the recovery, which at this point still remains tepid and marked by high unemployment rates and slow growth.

Nevertheless, such accommodative monetary policies have weakened the dollar, and since gold and the dollar often trade inversely from one another, gold has soared and will keep at it, especially if the Fed moves again with a third round of QE that could be announced this week.

Weak hiring figures and poor growth rates have analysts forecasting the Federal Reserve to stimulate the economy.

“I think there is constant Fed intervention. I think they are worried to death that we could have another Great Depression,” Taylor said.

Meanwhile, expect gold to form a greater part of the U.S and global monetary systems.

Global banking norms outlined under the Basel III, a global regulatory framework setting capital adequacy and liquidity requirements, might soon allow gold to carry the same risk weighting as does the U.S. Treasury when used as a reserve, Taylor said.

Gold asset holdings today form part of a Tier 3 class, which carries a 50 percent risk weighting, while Treasury holdings form part of a Tier 1 group, which has a 100 percent risk weighting. If gold were allowed to carry the same risk weighting as the safe-haven U.S. Treasury, more banks would demand it to meet reserve requirements.

“What I think is going to happen before this bull market is over is I think inevitably we are going to see some attachment of gold to the monetary system again, and in fact the Basel III agreements are looking towards making gold even as a reserve instrument with Treasurys,” Taylor said.

“What a lot of the banks are doing is selling their gold on the market and are going out and buying Treasurys. I think that it is just a matter of time before Mother Nature really forces the policymakers hands to start to recognize gold.”

Some countries aren’t even waiting and are already stocking up on the hard asset.

“Clearly some of the not-so-friendly countries to the United States like China and Russia are already pushing in that direction.”

Editor's Note: Get David Skarica's Gold Stock Adviser — Click Here Now!

© 2017 Newsmax Finance. All rights reserved.

 
1Like our page
2Share
StreetTalk
Gold prices might have slid in the last year, but overall, the precious metal still is moving ahead in a rally of a lifetime, said Jay Taylor, president of Taylor Hard Money Advisors and editor of Miningstocks.com.
Taylor,Gold,Bull,Market
811
2012-01-13
Thursday, 13 Sep 2012 08:01 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved