Tags: LaForge | gold | 660 | supercycle

Ned Davis' LaForge: 'Gold Looks Like It's Dying'

By    |   Friday, 03 October 2014 01:13 PM

Gold fell below $1,300 an ounce last Friday for the first time since Dec. 31 after a stronger-than-expected September jobs report.

And John LaForge, commodities strategist at Ned Davis Research, thinks the bear party is just getting started. The precious metal will end its current "supercycle" at $660, he told CNBC.

December gold futures traded at $1,218.60 late Wednesday afternoon on the Comex, up $6.20 from Tuesday.

LaForge reasons that based on history, gold, which fell about 65 percent during the 20-year bear market that began in 1980, will do so again, after peaking at a record $1,923 in September 2011.

"We know that commodities run in supercycles, and they eventually die. Gold looks like it's dying," he said.

"All this paper money that's floating around [from the Federal Reserve's stimulus], gold does react to that. Gold is money historically. So for some reason, we inject more money into the system, it finally grabs hold and we get more inflation. Then you're going to see gold rise and you're going to get another leg to the supercycle."

Gold has slid in recent weeks amid concern that the Federal Reserve will raise interest rates sooner than expected. That would likely stifle inflation, a bearish development for the precious metal. Many economists anticipate the Fed will begin increasing rates around the middle of next year.

As for the jobs data, non-farm payrolls climbed 248,000 last month, and the unemployment rate fell to a six-year low of 5.9 percent.

"Strengthening payrolls are going to add to the perception that the Fed is going to raise rates sooner," Charlie Bilello, director of research at Pension Partners, told Bloomberg. "The perception is that a more hawkish Fed is negative for gold."

Goldman Sachs predicts gold will drop to $1,050 within a year, thanks to stronger U.S. economic growth.
 

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Gold fell below $1,300 an ounce last Friday for the first time since Dec. 31 after a stronger-than-expected September jobs report.
LaForge, gold, 660, supercycle
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2014-13-03
Friday, 03 October 2014 01:13 PM
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