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Gold: Next Stop $1,400?

The commentary below is for the benefit of our readers from opinion makers and writers not associated with Euro Pacific. We do not guarantee the accuracy and completeness of third-party authored content. Opinions expressed are those of the writer, and may or may not reflect those held by Euro Pacific, or its CEO, Peter Schiff.
By: 
The Aden Sisters
February 9, 2010

Gold is soaring. It's hitting one new record high after another and it's well on its way to even higher levels.

This is good news for gold investors. But what if you haven't bought yet? Is it too late?

The answer is no. We feel strongly that gold's rise will continue in the months and years ahead, and there are many valid reasons why:

Most importantly, the unprecedented monetary policy currently in force is inflationary. The same is true of negative interest rates and rising oil and commodities. Gold buying by central banks is also boosting the gold price higher.

Even though gold is still relatively unknown in mainstream investment circles, it's starting to attract some attention. As this interest grows, momentum buying will pick up. The exchange-traded funds are another big positive, simply because they make it easy to buy gold.

So how high could gold go? In the years ahead, gold will likely soar well into the thousands of the dollars. But even in the weeks ahead, there's a good possibility that gold could surge another 20% before it takes a temporary breather.

This is because gold is a seasonal market. Within its bull market, it tends to have surges every year or so. In the last two surges, gold rose 56% and 58% respectively (see arrows on the gold price chart).

Currently, gold is surging again and the strength of this rise resembles the two powerful surges in 2006 and 2008. So far, however, gold has 'only' risen 31% in the last seven months.

Considering that momentum is building, it's not unreasonable to assume that percentage gains similar to the two previous surges are indeed likely. If so, that would take gold up to the $1350 level, and possibly higher. This year, our target level for 2009 has been $1200. That level has practically been reached.

We'll see what happens. But whatever the outcome in the weeks ahead, there's little question that gold will continue to be the best top-performing investment in the years ahead.

Mary Anne & Pamela Aden are analysts and editors of The Aden Forecast, an investment newsletter in its 28th year. The letter covers most global markets, but is particularly distinguished for its coverage of precious metals, currencies, and natural resources. We have read it for many years and recommend it highly. It is sober and serious, without the hype you find in many newsletters these days. For a sample copy, and information about a risk-free subscription, go to www.adenforecast.com.

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Investing in foreign securities involves risks, such as currency fluctuation, political risk, economic changes, and market risks. Precious metals and commodities in general are volatile, speculative, and high-risk investments. As with all investments, an investor should carefully consider his investment objectives and risk tolerance as well as any fees and/or expenses associated with such an investment before investing. International investing may not be suitable for all investors.

Dividend yields change as stock prices change, and companies may change or cancel dividend payments in the future. The fluctuation of foreign currency exchange rates will impact your investment returns. Past performance does not guarantee future returns, investments may increase or decrease in value and you may lose money.

Our investment strategies are based partially on Peter Schiff's personal economic forecasts which may not occur. His views are outside of the mainstream of current economic thought. Investors should carefully consider these facts before implementing our strategy.