Tags: Licata Oil to Top 95 | Gold to Stay Volatile

Licata: Oil to Top $95, Gold Price in a Bubble Right Now

By    |   Wednesday, 24 Aug 2011 09:21 AM

Gold prices have shot up too high and too fast this year and although the metal is a good-long term play, right now, it's in a bubble and could drop at any second, says John Licata, chief commodity strategist at Blue Phoenix Commodities, a commodities and metals research company.

He also said oil may top $95 by year’s end because it will be at least 18 months before oil production levels in Libya return to normal, despite the possible ouster of Moammar Gadhafi, eh told Newsmax.TV.

As for gold, he said the precious metal is in a bubble right now. "We're in it. This is a bubble as we speak. I think that we could see gold prices fall as quickly as we've rallied, I think we can go down north of $200 rather quickly," Licata tells Newsmax.TV.

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"I think there is way too much momentum in the price of gold, and I think although longer term we can continue at the trend above $2,000, I just think that having a move from $1,300 back in January to over $1,900 overnight is far too great of an upside swing that makes me nervous."

Licata cites gold mining heavyweight Barrick Gold's announced plans to buy copper producer Equinox Minerals for about $7.7 billion as evidence of the need to diversify from gold, even if just a bit.

"That's a copper play. So if one of the biggest gold behemoths in the world is starting to look to diversify I believe general investors should as well."

Oil prices, meanwhile, may be down a bit over optimism over an apparent end to Libyan leader Moammar Gadhafi's regime in Libya, where rebels have overtaken the capital city of Tripoli.

But it will take about 18 months to get production levels back up to 1.6 million barrels day, the country's output prior to the uprising.

"It's not like flipping a light switch back on to get the production back on line," Licata says.

"I think this is an opportunity for investors who are longer-term to look at the price of crude oil as a good long opportunity, because at Blue Phoenix, we believe that the prices of crude oil could top $95 by year end."

West Texas Intermediate crude oil is currently trading around $86 a barrel.

Other metals have room to grow like copper, which increases in demand when economies grow.

"To me copper prices are starting to get attractive. If you're betting on a longer-term economic recovery around the world, then I think copper prices could actually be a good source," Licata says.

Like gold, silver prices are due for a breather but metals such as platinum and palladium are ripe for rising also.

"I think silver prices have gotten too high but I think the investment demand and the appeal of jewelry, which is one of the predominant uses of much of the metals we are talking about, makes me believe that platinum and palladium still have upside, especially palladium."

Gold prices have been surging all year as investors have fled to the precious metal as a safe haven amid a weaker dollar and economic and stock-market uncertainty.

In fact, the popular SPDR Gold exchange-trade fund (ETF) has become the largest ETF in the world, surpassing the heavily-traded S&P 500 SPDR, CNBC reports.

The SPDR Gold ETF holds $77.5 billion in assets, about $1 billion more than the S&P 500 SPDR, according to State Street Global Advisors, the marketer of both ETFs, CNBC adds.

Gold traders, however, say they agree with Licata and argue the yellow metal is due for a breather, even if just for a time out.

"I think that gold remains a 'buy the dips' market," says Kingsview Financial analyst Matt Zeman, according to the Associated Press.

Zeman believes a "sizable correction" is coming at some point for gold, but says that the price could reach $2,000 an ounce before that correction occurs, the AP adds.

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Gold prices have shot up too high and too fast this year and although the metal is a good-long term play, right now, it's in a bubble and could drop at any second, says John Licata, chief commodity strategist at Blue Phoenix Commodities, a commodities and metals research...
Licata Oil to Top 95,Gold to Stay Volatile
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2011-21-24
Wednesday, 24 Aug 2011 09:21 AM
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