Can gold make another eight-fold jump as it did between 2000, when it traded at $250 an ounce, and 2011, when it touched a record high of $1,923?
Yes, says Avi Gilburt, author of ElliottWaveTrader.net. "The math shows it can and will, with the price of gold futures surpassing $25,000, and more," he writes in an article for MarketWatch
Gold traded at $1,168.20 late Friday, after dropping to an 11-week low of $1,164.20 earlier in the day, amid strong jobs data for May.
"Yes, I know that this is quite a bold prediction. However, please remember that, for me, it is all a matter of mathematics and nothing more," Gilburt states.
Elliott Wave theory indicates that gold is now completing a 3 ½-year downward correction and is on the verge of "a major bull market phase that can last the next 50 years," he argues. "We are now on the cusp of the next major bull market in the investing world."
Other experts are bullish on gold too. The sluggish U.S. economic recovery has made the Federal Reserve slow to raise interest rates, they note. GDP shrank an annualized 0.7 percent in the first quarter, and the Atlanta Fed's forecasting model puts growth at just 1.1 percent for the current quarter.
Most economists don't expect the Fed to move until at least September. And the continued low rate environment should give gold a boost, as it could ultimately lead to higher inflation, some experts say.
"Even if we got a small hike in the U.S., I can’t believe it will follow with more. A slow rate-hike cycle wouldn’t hurt gold in the long run," Matthias Kuzinski, a commodity fund manager at Lupus Alpha Asset Management in Frankfurt, tells The Wall Street Journal
And some investors see gold as an attractive alternative to frothy stocks and bonds. "Gold is still cheap relative to fixed income [assets.] Gold could really pop and move," Nicholas Johnson, a commodity fund manager at Pimco, tells The Journal.
"The economy will have quite a hole to climb out of," Edward Meir, senior commodities strategist with brokerage INTL FCStone, told The Journal. "We think the Fed will raise rates once and then they're not going to do anything for a while and that will be good for gold."
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