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MetalMiner: Gold Bull Market Not Over

By    |   Wednesday, 13 March 2013 08:08 AM

Is the decade-long bull market in gold finally over? Probably not, according to observers who say short-term traders are keeping a false lid on prices and that rising production prices will lift the metal higher once more.

MetalMiner reported major exchange-traded fund (ETF) providers offer a line of defense in the ultimate direction of gold. They hold tons of gold around the world.

Nevertheless, analysts at banks such as Goldman Sachs, Credit Suisse and Societe Generale have recently trimmed their price forecasts and claimed the gold bull market may be dead.

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“The major ETF providers are understandably not having any of this argument, saying it’s the action of a limited part of the ETF investment community made up of hedge funds and short-term players” MetalMiner stated. “Long-term players will keep the faith the exodus will soon abate.”

Bruce Cook, an exploration analyst, estimated recently the average price to mine gold has risen from $300 to about $1,500 per ounce since 2000.

“New viable mines are few and far between, yet mining costs are relentlessly rising. This alone will provide a floor to prices in the medium term,” MetalMiner predicted.

Some big hedge fund managers, like George Soros and Steve Mandel, have recently become more pessimistic about gold’s prospects. But rival hedge fund manager John Paulson has been staying the course as a gold bull, according to The Wall Street Journal.

Goldman Sachs attracted attention last month when it slashed its 2013 gold price forecast to $1,600 an ounce from $1,810 an ounce, and its 2014 forecast from to $1,450 an ounce from $1,750 an ounce.

The Wall Street Journal reported Goldman said in a research note: “The decline in prices since last fall and our updated forecast suggests that the turn in the gold price cycle is likely already underway. As a result, although our U.S. economic forecasts point to modest near-term upside to gold prices, we believe that a sharp recovery in prices to our previous price forecast is unlikely.”

Bill Baruch, an investment strategist at iiTrader, told Yahoo that the appeal of a rising stock market has taken away some of gold’s allure, but he predicted that would be temporary.

“If we hold $1,500, we’re going to see $1,800 by the end of the year,” Baruch predicted, citing short sellers, frustrated gold bugs and the economy, plus the likelihood of continued easing by major central banks.

MetalMiner concluded the true direction of gold might ultimately depend on a more macro factor — the outcome of global gross domestic product (GDP).

“If GDP growth does not live up to expectations this year and next, gold at sub-$1,500 per ounce may look like it has some legs after all,” the publisher predicted.

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Is the decade-long bull market in gold finally over? Probably not, according to observers who say short-term traders are keeping a false lid on prices and that rising production prices will lift the metal higher once more.
gold,MetalMiner,ounce,price
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2013-08-13
Wednesday, 13 March 2013 08:08 AM
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